China shares touch 3-month highs on recovery hopes

SHANGHAI: China stocks rose to new three-month highs on Wednesday, lifted by strong inflows as investors expect further policy support to fuel a growth rebound, while gains in financial and property firms boosted Hong Kong’s Hang Seng index.

China stocks fall on COVID worries, US inflation

** At the midday break, the Shanghai Composite index was up 1.41% at 3,335.12, just shy of its highest level since March 8.

** China’s blue-chip CSI300 index was up 1.84% after hitting its highest level since March 17.

** Adding to investors’ hopes for an economic recovery in China, industrial production rose unexpectedly in May, though consumption data remained weaker as shoppers were confined to their homes in Shanghai and other cities.

** But while investors are hoping for continued support for the economy, China’s central bank chose to keep its medium-term lending rates unchanged on Wednesday.

** “The government is likely to respond to economic weakness by delivering more fiscal stimulus. At the same time, to avoid a rapid rise in fiscal leverage, the government may also continue to deregulate some sectors to help promote tax revenue growth and employment,” Iris Pang, chief economist for Greater China at ING, said in a note.

** The consumer staples sector gained 1.05%, the real estate index jumped 5.26% and the healthcare sub-index rose 1.56%.

** The CSI financial sector sub-index was 3.83% higher and securities firms jumped 5.38% as investors bet on a brighter outlook for the sector.

** Refinitiv data showed strong buying by foreign investors, with inflows of more than 8.2 billion yuan ($1.22 billion through the Stock Connect’s Northbound leg.

** In Hong Kong, Chinese H-shares rose 2.02% to 7,481.93, while the Hang Seng Index was up 1.42% at 21,367.11.

** The smaller Shenzhen index was up 1.15%, the start-up board ChiNext Composite index was higher by 1.14% and Shanghai’s tech-focused STAR50 index was up 0.21%.

** The yuan was quoted at 6.722 per US dollar, 0.3% firmer than the previous close of 6.7425.