China shares edge higher as consumer stocks recover; Hong Kong gains

SHANGHAI: China's blue-chip shares edged higher on Tuesday, recovering from a sharp drop in the previous session, as consumer staples and financial stocks rose, but lingering concerns over policy tightening capped gains.

At the midday break, China's blue-chip CSI300 index was up 0.3% after dropping more than 2% on Monday. It is down nearly 15% from a Feb. 18 high.

The Shanghai Composite index was up 0.24% at 3,428.08 points.

Gains were led by the consumer staples sector, which added 1.47% after slumping 3.8% in the previous session.

The financial sector, rose 0.56%, real estate firms gained 1.77% and the healthcare sub-index was up 0.52%.

But with expectations of rising inflation and the gradual removal of pandemic-era stimulus, investors see little room for a significant market upside.

"We are in this vortex... a vacuum of any catalyst that actually means anything directional or sentiment-wise to the market," said Andy Maynard, head of equities at China Renaissance in Hong Kong.

"Without a catalyst we're not going anywhere. In fact, we're just going to probably drift lower."

Chinese H-shares listed in Hong Kong rose 1.54% to 11,316.23, while the Hang Seng Index was up 0.62% at 29,012.96.

The smaller Shenzhen index was up 0.49%, the start-up board ChiNext Composite index was higher by 0.59% and Shanghai's tech-focused STAR50 index was down 0.38%?.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.68% while Japan's Nikkei index was up 0.54%.

The yuan was quoted at 6.4973 per US dollar, 0.05% firmer than the previous close of 6.5006.

So far this year, the Shanghai stock index is down 1.3%? and the CSI300 has fallen 3.1%, while China's H-share index in Hong Kong is up 5.4%.

Shanghai stocks have declined 2.31% this month.