China stocks rebound on signs of state support; tech share slide continues
- The large-cap CSI300 Index was up 1.6% by the lunch break
SHANGHAI: China stocks rose on Monday, following last week’s global selloff, as signs of state support lifted sentiment in the so-called traditional sectors while richly valued tech shares continued to drop.
The large-cap CSI300 Index was up 1.6% by the lunch break, while the Shanghai Composite Index gained 1.2%.
Both indices slumped more than 5% last week as a global selloff in chip shares and renewed conflicts in the Middle East soured sentiment.
In Hong Kong, Hang Seng Index climbed 2%.
Investors were encouraged by news that China’s securities watchdog would meet market participants on Monday to discuss market stability.
Also signalling Beijing’s intention to stem the market rout, two state-owned firms said over the weekend they had spent roughly 60 billion yuan ($8.86 billion) recently buying stocks.
Sectors such as consumer, property and utility that far lagged tech shares this year supported the rebound.
The tech-focused STAR Composite Index reversed early gains to end morning trading down 1%. An index tracking chip-making material and equipment companies plunged 3%, heading toward a seven-day losing streak.
“Any extremely overcrowded sectors face huge volatility risks,” said Wang Zhuo, partner of Shanghai Zhuozhu Investment, referring to China’s AI and chip stocks. When their uptrend loses steam, “money will definitely hunt for assets able to offer earnings certainty, and stable cash flows.”
Signalling growing caution toward tech stocks, institutional demand for chipmaker CXMT Corp’s $8.6 billion IPO was less feverish than in China’s previous initial public offerings this year.
In Hong Kong, biotech, energy and consumer stocks led the gains. ‑Reuters
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