HONG KONG: China shares rebounded from modest early losses on Thursday, led by gains in real estate developers and consumer goods, as the start of long-awaited US rate cuts raised hopes that Beijing will have more latitude to stimulate the ailing Chinese economy.
China’s blue-chip CSI300 Index and Shanghai Composite Index rose 0.8% and 0.7%, respectively.
Hong Kong, which is more sensitive to external monetary conditions, saw its Hang Seng gauge climb 2% to hit a two-month high, while the Hang Seng Tech Index jumped more than 3%.
The US central bank on Wednesday kicked off an anticipated series of interest rate cuts with a larger than usual half-percentage-point reduction.
Investor sentiment perked up as the US rate cut provides Beijing with more room to ease monetary conditions and other policies, with less risk of heaping pressure on the yuan.
China is widely expected to trim its main policy and benchmark lending rates on Friday, a Reuters poll showed.
While Fed rate cuts are generally positive for emerging market assets, Yan Wang, chief emerging markets and China strategist at Alpine Macro, said China’s domestic macroeconomic policies and growth outlook are far more critical than the Fed’s actions.
Shen Zhengyang, investment advisor at Northeast Securities, said sustainability of the market rebound hinges on the strength of China’s easing measures.
“If China slashes benchmark lending rates, cuts mortgage rates for existing loans, lowers RRR, and issue more bonds to aid the economy, the stock market may bounce 5-10%,” Shen said.
The CSI Real state Index and CSI Liquor Index gained 3.5% and 2.7% respectively.
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