SHANGHAI: Mainland China and Hong Kong stocks climbed nearly 2% on Tuesday, underpinned by signs of local economic improvement, while investors braced for a crucial week in which Americans will elect a new president.
Market sentiment improved after a private survey showed that China’s services activity expanded at the fastest pace in three months in October, helped by early signs that Beijing’s big stimulus push was helping improve business conditions.
But the US election remained the key focus of markets globally, with opinion polls showing both Vice President Kamala Harris and former President Donald Trump virtually even.
China, HK stocks close higher after PBOC begins swap programme
At the midday break, the Shanghai Composite index was up 1.8% at 3,369.70 points, while the blue-chip CSI300 index was up nearly 2%.
The financial sector sub-index was higher by 2.38%, the consumer staples sector rose 1.27%, the real estate index gained 2.79% and the healthcare sub-index advanced 1.74%.
In Hong Kong, Chinese H-shares listed in the financial hub, the Hang Seng China Enterprises Index rose 1.51% to 7,478.92 points, while the Hang Seng Index gained 1.24% at 20,823.36 points.
As part of his pitch to boost American manufacturing, Trump has promised voters he will impose tariffs of 60% or more on goods from China. Trump’s proposed tariff and tax policies are seen as inflationary, and therefore, likely to keep US interest rates high and undermine currencies of trading partners.
“Direct US tariffs on imports from China may have less impact than in 2018, but further tightening of the supply chain measures introduced by the Biden administration or indeed sweeping tariffs against intermediary countries have the potential to cause greater damage to China’s economy,” said Jon Harrison, managing director for EM macro strategy at TS Lombard. “At the same time, Beijing’s change of direction on stimulus, including a focus on supporting equities and boosting consumption, will help to cushion the market impact.”
Separately, Chinese lawmakers reviewed a cabinet bill that would raise ceilings on local government debt to replace existing hidden debt as the standing committee of China’s top legislature started their meeting on Monday, state media Xinhua reported.
China will upgrade its free trade zones and explore investment agreements with other countries, Chinese Premier Li Qiang said on Tuesday, adding that opening up was a “must” to combat rising unilateralism globally.