SHANGHAI: China stocks rose on Friday, gaining for the second week in a row, though investors were reluctant to place big bets as they awaited details of Beijing’s fiscal stimulus and next month’s US presidential election.
Hong Kong stocks also gained, but registered a third consecutive weekly loss, as the late-September euphoria dissipated.
China’s blue-chip CSI300 Index and the Shanghai Composite Index both edged up roughly 1%, and were up 0.1% and 0.6% respectively, for the week.
Hong Kong’s Hang Seng Index rose 0.5%, but was down 1% for the week.
China and Hong Kong stocks surged last month after Beijing kicked off its biggest stimulus since the pandemic, but the heavy outflows this month appear to have put the brakes on that sweeping rally.
Global hedge funds have clawed back nearly 80% of the peak cumulative buying in Chinese equities as of Oct. 23, Goldman Sachs’ prime brokers team estimates.
China stock market turnover, which hit record levels on Oct. 8, has been shrinking since, suggesting growing caution from investors looking for direction, Founder Securities investor advisor Luo Xuhong said in a note to clients.
“The market is getting uneasy about fiscal stimulus”, the details of which have not yet been announced, Luo said.
The Nov. 5 US election is also keeping investors on edge.
A win for Republican Donald Trump, particularly if accompanied by a Republican sweep of Congress, is expected to squeeze the yuan and shares in the export sector.
A victory for Democrat Kamala Harris is likely to result in the opposite trades.
“If Trump wins, the US is expected to levy fresh tariff on Chinese goods,” Haitong Securities said in a report.
China’s small-caps outperformed blue-chips on Friday, with the CSI 2000 Index jumping 2.4%, compared with a gain of 0.6% in the CSI Mega-cap Index.
Winners included photovoltaic, media and electronics stocks, while losers included utilities, banking and telecom services shares.
In Hong Kong, most sectors rose, with industrials, biotech and information technology shares leading the gains.