China stocks climb as economic data, easing contagion fears lift risk mood

HONG KONG: China stocks saw a broad-based rally on Wednesday as investors welcomed domestic economic data that signalled signs of improvement, while on-target US inflation print helped ease contagion fears following the Silicon Valley Bank’s collapse.

** China’s blue-chip CSI 300 Index went up 0.37%, while the Shanghai Composite Index rose 0.67%.

** Hang Seng Index climbed 1.26% and Hang Seng China Enterprises Index jumped 1.6%.

** Retail sales in China in the first two months jumped 3.5% year-on-year, reversing a 1.8% annual fall seen in December, but factory activity expanded slightly slower than expected, rising 2.4% for the same period, according to data by the National Bureau of Statistics.

** Fixed asset investment in the first two months was 5.5% higher than in the same period of 2022 versus expectations for a 4.4% rise.

** Property investment fell at a slower pace in January-February, down 5.7% year-on-year, compared with an annual fall of 12.2% in December, while residential sales jumped 3.5% during the period.

** Hong Kong-listed mainland property developers surged 2.9% and China’s CSI Construction Engineering Index climbed 2.6%, underpinned by improved real-estate numbers.

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** “The economic data released today confirmed the recovery in China was well on track,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management said. “Property sales improved more than the market expected. Infrastructure investment continued to contribute to the rebound in overall investment.”

** The Federal Reserve is likely to hike interest rates next week after the collapse of two banks sparked fears of a wider financial crisis in the United States, though worries about possible contagion have eased.

** Meanwhile, China’s central bank ramped up liquidity injections when rolling over maturing medium-term policy loans for a fourth month in a row on Wednesday.

** Eva Lee, head of Greater China equities at UBS Global Wealth Management Chief Investment Office, said if international investors see real recovery in China’s consumption and restore their confidence, this “should benefit the Hong Kong market as more China internet and large-cap consumption stocks are listed there”.

** Hong Kong-listed technology giants gained 1.9%; Baidu surged 4.9% as investors snapped up ChatGPT-related stocks after OpenAI said it is beginning to release a powerful artificial intelligence model known as GPT-4.