China stocks retreat after rally as investors eye more stimulus

SHANGHAI: China stocks slipped on Friday, after three sessions of gains following the government’s decision to roll out policy support, while investors locked in profits and cautiously awaited more details on the stimulus plans.

Beijing’s support pledges scrape China stocks from lows

• The blue-chip index lost 0.7%, but was on track for a 1.5% weekly gain. The Shanghai Composite edged 0.4% lower, although the index was poised for a 2.2% weekly rise, its strongest since September 2023.

• Hong Kong’s Hang Seng Index eased nearly 1%, but has gained nearly 5% this week, its best performance since last July.

• The strong weekly performances were backed by a string of supportive policies by Beijing including a deep cut to bank reserves, policy to ease a liquidity crunch facing troubled property developers, and news report of a 2 trillion yuan ($278.53 billion) rescue package to buy stocks.

• The broad Asian share market was set to snap a three-week losing streak, while investors awaited a key reading on US inflation later in the day to gauge the outlook for Federal Reserve rates.

• Real estate developers rose 2.4% against a weak broader market on Friday, after the National Financial Regulatory Administration said China’s financial institutions should actively fulfil reasonable financing demands for property projects.

• Shares of anime comic gaming firms climbed 2.3%, after the press and publication administration said China approved licenses for 115 domestic online games for January.

• Most other sectors retreated, with semiconductors , new energy down 2.9% and 1.5%, respectively.

• “Market sentiment rose upon a number of positive policy news,” Morgan Stanley said in a note.

• “We advise investors to closely monitor the subsequent policy-related actions from the authorities, as quick follow-through and follow-up would be essential to keep the sentiment momentum going.”

• Foreign investors sold a net 2.5 billion yuan ($348.27 million) of Chinese shares via the Stock Connect so far on the day, after strong inflows in the previous session.

• Tech giants listed in Hong Kong retreated 2.7%, after a combined 9% jump in the previous three sessions.