China stocks closed higher on Wednesday as investors bet on further fiscal and monetary stimulus in the second half of 2016, following GDP data on Friday. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.3 percent to 3,282.87 points, while the Shanghai Composite Index gained 0.4 percent to 3,060.69.
Analysts said that Tuesday's international tribunal ruling against China on the South China Sea arbitration case had little measurable impact on markets, with investors primarily focused on domestic policy. Gains were broad-based, with financial and manufacturing shares boosting indexes. China's economic growth likely cooled to a fresh seven-year low of 6.6 percent in the second quarter as the industrial sector loses steam and a boost from financial services fades, according to a Reuters poll of 61 economists.
Finance stocks led indexes up, with sharp rises in banking shares, including China Minsheng Banking Corp Ltd, leading the CSI300 higher. Chinese Premier Li Keqiang said on Wednesday China maintained sound economic growth in the second quarter, although he cautioned the foundation for strong economic performance was not yet strong.
On Tuesday, the Permanent Court of Arbitration in the Hague ruled in favour of the Philippines in a longstanding case, saying China had breached the Philippines' sovereign rights by endangering its ships and fishing and oil projects. Analysts said the ruling - that China's claim to nearly all of the South China Sea had no legal basis - had little impact on stocks although some defence-related manufacturers might benefit.
Instead, investors were focused on June trade figures due at 0700 GMT on Wednesday and second quarter GDP data due on Friday, which economists predict will be the weakest in seven years. "The South China Sea ruling was expected, and is mainly a matter of face, the direct impact on the market is pretty limited," said Xiao Shijun, analyst at Guodu Securities in Beijing. "On the GDP data and other macro data, if it comes in weaker than expected, you might see some small adjustments in monetary policy."
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