SHANGHAI: China stocks rose slightly on Tuesday while Hong Kong shares dropped, as investor confidence remained weak even after state fund Central Huijin bought exchange-traded funds (ETFs) to bolster the flagging market.

China’s blue-chip CSI 300 Index closed up 0.4% but still hovered around 4-1/2-year lows, while Hong Kong’s Hang Seng Index lost 1.1%, hitting the lowest level in nearly 11 months.

The weakness comes amid China’s economic sluggishness, higher US yields and a fragile global sentiment on fears of the Israel-Hamas war escalating.

“There has been some irrational over-correction, as investors shrugged off China’s better-than-expected growth data,” analysts at Nanjing Securities wrote in a note.

Central Huijin, which makes equity investments on behalf of China’s central government, said it bought ETFs on Monday, and “will continue to increase holdings in future,” after blue-chip stocks hit lows last seen in since February 2019.

“There should be a rebound after the move,” said Pang Xichun, research director at Nanjing RiskHunt Investment Management, but pointed out that investors still need to monitor foreign outflows.

Foreign investors sold a net 5 billion yuan ($684.3 million) of Chinese shares via the Stock Connect on Tuesday, amid outflows from Chinese equities at a record speed in recent months.

Shares in securities brokers jumped 3.2% to lead gains, while semiconductors and non-ferrous metal added 1.9% each. Hong Kong’s Hang Seng Tech Index lost 1.1%.

Yang Delong, chief economist at First Seafront Fund Management, said the market and the economy needed “stronger stimulus measures.” China is set to approve slightly more than 1 trillion yuan in additional sovereign debt issuance on Tuesday to help spur growth, three sources told Reuters.