SHANGHAI: China stocks rose on Monday, with a strong rebound in blue-chip stocks offsetting losses in highly-valued tech shares, as signs of slowing economic growth fanned hopes of fresh policy easing.

Hong Kong stocks also gained, despite a fall in index heavyweight Alibaba Group Holding Ltd following a sexual assault scandal.

The CSI300 index rose 1.2% to 4,980.64 points at the end of the morning session, while the Shanghai Composite Index gained 0.9% to 3,488.92 points.

The Hang Seng index added 0.94% to 26,424.41 points, while the Hong Kong China Enterprises Index gained 0.98% to 9,364.23.

China’s factory gate inflation climbed 9% in July, rising at a faster clip from the previous month and above expectations, adding to strains on an economy losing recovery momentum.

Domestic export growth unexpectedly slowed last month, following outbreaks of COVID-19 cases. Global banks including JPMorgan, Morgan Stanley and Goldman Sachs reduced forecasts for China’s GDP growth.

“We expect another 50bp RRR cut this year, while local government bond issuance could accelerate in the coming months to support infrastructure investment,” Morgan Stanley wrote, citing the need for more policy support to stabilize the job market.

China’s banking and real estate indexes rebounded sharply, jumping 3.2% and 6.7% respectively.

But new energy and semiconductor companies fell, as Chinese regulators said last week they would continue to closely monitor the price and market order of chips.

In Hong Kong, Chinese food delivery giant Meituan added 5.61%, after it joined a meeting with government regulators on improving safety and labour rights for delivery workers.

Chinese e-commerce giant Alibaba Group Holding Ltd dropped 2.53%, as an employee alleged last Saturday on the company’s intranet that she was sexually assaulted by her boss and a client.