SHANGHAI: China stocks hit a two-week high on Monday and Hong Kong shares also climbed as Beijing stepped up efforts to stabilise its markets, while hopes of early interest rate cuts by global central banks also helped boost sentiment.
China’s blue-chip CSI300 Index closed up 1.4%, while the Shanghai Composite Index ended 0.9% higher. Hong Kong’s stock benchmark Hang Seng Index jumped 1.7%.
Chinese mutual fund companies are rushing to buy their own stock products as the country’s securities regulator vowed fresh measures to guide long-term capital into the stock market.
Chinese premier Li Qiang on Sunday said that China would further expand market access and increase imports, which aided investor sentiment.
Top Chinese leaders have vowed to revive confidence in the stock market, with the Ministry of State Security saying on Friday that financial stability is a key part of national security.
The rally in the markets comes as Asian shares rose for a fourth straight session after markets moved to price in earlier rate cuts in the US and Europe.
But some analysts cautioned that China’s disappointing Purchasing Managers’ Index (PMI) data points to a fragile economic recovery.
“We interpret the October PMI data as evidence that more policy support is needed for sustained growth momentum as fundamental demand remains soft,” Goldman Sachs analysts said.
In addition, “with interest rates in China ‘lower for longer’ while interest rates outside of China ‘higher for longer’, capital outflow pressures are likely to persist”, they added.
China’s latest balance of payments data shows that the country recorded its first-ever quarterly deficit in foreign direct investment.
Stocks rose across the board, with IT and healthcare stocks jumping nearly 3% each, while the STAR 100 Index rose 3.4%. Tech stocks in Hong Kong rose more than 4%.
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