SHANGHAI: China stocks struggled for direction on Wednesday ahead of a closely watched outcome of the US Federal Reserve meeting, with traders weighing the developments around domestic COVID-19 cases and the Russia-Ukraine conflict.
Hong Kong stocks rebounded strongly from a huge sell-off in the previous session, with tech giants leading the gains, as investors rushed to buy the battered shares.
Broader Asian markets rose as Ukrainian President Volodymyr Zelenskiy said on Wednesday peace talks were sounding more realistic but more time was needed.
China’s yuan bounced from a three-month low, lifted by a media report that Saudi Arabia was in talks to price its oil sales to China in the Chinese currency, while the central bank also appeared reluctant to allow more weakness.
At the end of the morning session, the CSI300 index was up 0.5% at 4,003.16 points, after dropping as much as 1% earlier in the day. The Shanghai Composite Index was flat at 3,065.12 points. China’s blue-chips have lost roughly 13% this month, and closed at 21-month lows in the previous session, prompting analysts and academicians to appeal to the government to stabilize the market.
“It is quite reasonable for the Chinese government to properly step in, maintain the basic stability of the stock market and avoid further decline,” Zhang Ming, Deputy Director of Institute of Finance & Banking at Chinese Academy of Social Sciences said in a note.
Zhang added this round of declines came against a very complex background, hit by “external geopolitical shocks, China-US game and malicious short-selling by international investors.”
JPMorgan Chase & Co downgraded 28 Chinese stocks listed in the United States and Hong Kong on Monday, citing “China’s geopolitical risks” as “more and more country and corporates impose sanctions on Russia.” Mainland Chinese firms listed in Hong Kong plumbed their 2008 lows in the previous session.
Mainland China reported 1,952 new confirmed COVID-19 cases on March 15, the country’s national health authority said on Wednesday, dropping from a two-year high caseload of 3,602 a day earlier.
A recent surge in infections had raised concerns about the rising economic costs of its tough measures to contain the disease.
Analysts at ING said in a note that they expected market moves in Asia to be “cautious” ahead of the Fed meeting.
Investors are expecting the US central bank to raise interest rates for the first time in three years by at least 25 basis points amid soaring prices.
The Hang Seng index added 2.5% to 18,875.51 points, while the Hong Kong China Enterprises Index gained 3.2% to 6,319.07.
The Hang Seng Tech Index soared 6% after tumbling roughly 22% since last Friday, as the US Securities Exchange Commission identified Chinese companies that will be delisted if they do not provide access to audit documents.
“After this epic selloff, the Hang Seng is now mired in deep allocation value,” Hao Hong, Head of Research at BOCOM International said in a note.
“When a distressed market was seen with a US recession, which now appears increasingly likely, the Hang Seng would rebound from these levels, but make another low later.”
Comments
Comments are closed.