Hong Kong, China shares rebound on Beijing’s fresh stimulus

Hong Kong’s benchmark Hang Seng index posted its biggest jump in nearly four months in a shortened trading session on Thursday, while China shares also rose, buoyed by Beijing’s fresh economic stimulus measures and a pause in the yuan’s slide.

Hong Kong, China stocks fall more than 1% on slowdown worries

** The Hang Seng index rose 3.6% to close at 19,968.38 in the afternoon, posting its biggest gain since late April. The morning trading was suspended due to a typhoon.

** The blue chip CSI300 Index rose 0.8% to 4,116.24, while the Shanghai Composite Index gained about 1% to 3,246.25.

** Sentiment was boosted after China’s State Council, or cabinet, announced fresh steps to support an economy suffering from a property crisis, COVID-19 outbreaks, and heave waves.

** Fresh stimulus measures include a new quota of 300 billion yuan ($43.79 billion) in policy bank financing tools, and a fresh quota of about 500 billion yuan in local government special bonds, state media reported late on Wednesday.

** Also, China’s Ministry of Human Resources and Social Security said on Thursday the country will focus on expanding jobs and promote fiscal, monetary and industrial policies to support job market stabilisation.

** The yuan rebounded from a two-year low against the dollar, helped by a firmer-than-expected official guidance.

** Sources told Reuters on Wednesday that China’s foreign exchange regulator phoned several banks to warn them against aggressively selling the Chinese currency.

** The recent weakness in stocks “released selling pressure, creating room for a rebound that was triggered by news of fresh stimulus,” said Linus Yip, Hong Kong-based chief strategist at First Shanghai Securities Ltd.

** Hong Kong’s Hang Seng TECH Index surged 6%, the biggest one-day percentage gain in nearly four month, amid market talks that Sino-US audit talks have made progress.

** In China, financials and property shares rose, but Shenzhen’s start-up board ChiNext and Shanghai’s tech-heavy STAR Market fell.

** Energy companies jumped 5.2%, but new energy shares dropped nearly 2%.

** Nomura, however, cautioned that the new stimulus measures are not game changers, as the zero-COVID policy and property woes continue to weigh on the economy.