HONG KONG: China and Hong Kong stocks rebounded on Monday following two weeks of decline, lifted by banks and energy shares as dividend plays gained favour amid falling bond yields.

China, HK stocks rebound as report on Beijing’s new budget deficit plan lifts sentiment

• At the midday break, the Shanghai Composite index added 0.21% to 3,374.99 points, while the blue-chip CSI300 index climbed 0.72%.

• The bank sector sub-index rallied 2.28%, the energy sector jumped 1.34% and consumer staples sector gained 0.54%, leading gains onshore.

• “Market speculation around policies has largely come to an end with all the important meetings in December wrapped up,” analysts at Citic Securities said in a note on Monday.

• Banking stocks remain a preferred sector for renminbi asset allocators with high dividends and low volatility, and are expected to see increased allocation by insurance funds towards the year-end, they added.

• Meanwhile, yields on China’s long-dated government bonds, including the 10-year, hit fresh record lows in morning deals, which also fueled demand for high-dividend stocks.

• Before the session’s rise, the CSI 300 index registered two weeks of losses amid the lack of stronger stimulus from Beijing and still-patchy economic data.

• Still, the gauge has rallied over 15% so far in 2024, set to end the unprecedented three-year losing streak weighed by the COVID-19 restrictions, a long-running property crisis and deflation pressures.

• The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index, rose 0.73% to 7,195.91.

• The city’s benchmark index, Hang Seng Index was up 0.7% at 19,857.98, on track to end a four-year losing run.

• Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.21% while Japan’s Nikkei index gained 0.89%.

• Chinese ADRs rose 0.53% overnight.