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SHANGHAI: Chinese stocks closed up on Thursday, after the cabinet said Beijing would use timely cuts in banks’ reserve requirement ratios (RRR) and other policy tools to support the economy, amid the worst COVID-19 outbreak in two years.

The blue-chip CSI300 index rose 1.3%, to 4,191.57, while the Shanghai Composite Index gained 1.2% to 3,225.64 points.

The Hang Seng index rose 0.7%, to 21,518.08, while the China Enterprises Index gained 1.0%, to 7,385.58 points.

The State Council said on Wednesday China would step up financial support for the real economy, especially industries and small firms hit by the pandemic, and will lower financing costs.

“It is very likely that the PBoC could cut RRR by 50bp for most banks in the next several days,” said Nomura in a note. “These monetary measures and other policies are likely to have little positive impact. In our view, refining and adjusting the ZCS (zero-COVID strategy) is key to a growth recovery.” ** A vast majority of market participants in a Thursday Reuters poll believe the central bank may opt not to cut borrowing costs on its medium-term policy loans this week, while a RRR cut would be imminent.

Reuters poll also showed China’s economic growth is likely to slow to 5.0% in 2022, down from the 5.2% estimates in a Reuters poll in January.

Mainland China reported 29,411 new coronavirus cases on Wednesday, of which 3,020 were symptomatic and 26,391 were asymptomatic.

However, President Xi Jinping said China must not relax COVID control and prevention measures, state radio reported.

On geopolitical front, US Treasury Secretary Janet Yellen said China should help end Russia’s “heinous war” in Ukraine or face a loss of its standing in the world.

Consumer staples climbed 3.7%, with liquor makers up 5.2%, while real estate developers jumped 4.4%.

Energy shares gained 3.1%, with coal surging 4.8%, while tourism stocks ended up 2.5%.

Alibaba Group lost 3.1% in Hong Kong, as Bloomberg News reported that China’s anti-corruption watchdog was among the agencies involved in a recent inquiry into links between the e-commerce giant’s affiliate Ant Group and state-owned Chinese companies.

Tech giants listed in Hong Kong gained 1.2%.

Hong Kong-listed mainland developers closed up 2.7%, while consumer discretionary stocks rose 3.7%.

Hotpot chain Haidilao International Holding jumped more than 10% to become the biggest percentage gainer on the Hang Seng benchmark.

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