China stocks rise on modest CPI data, stimulus hopes

SHANGHAI: China stocks on Friday saw their biggest gain in a month, as modest inflation data and policy support hopes helped investors look past tightened COVID-19 measures.

Chipmakers lead China stocks higher

** The blue-chip CSI 300 Index added 1.1% by the end of the morning session, and the Shanghai Composite Index gained 0.7%.

** The Hang Seng Index rose 2.6%, while the Hang Seng China Enterprises Index jumped 2.9%.

** China’s cabinet announced more steps on Thursday to spur investment, state media said, extending a raft of measures to bolster its COVID-19-ravaged economy.

** Meanwhile, China’s consumer prices rose at a slower-than-expected pace in August amid heatwaves and COVID-19 flare-ups, while producer inflation eased to the lowest since February 2021, official data showed.

** “With the domestic recovery continuing to face pressure, the low inflationary pressure gives the PBOC (People’s Bank of China) room to stay accommodative,” said Erin Xin, an economist at HSBC in a note, referring to the country’s central bank.

** China-listed real estate developers surged 4.5%, while mainland developers traded in Hong Kong jumped 5.9%.

** Financials shares gained more than 2%, and healthcare firms rose 1.6%.

** Tech giants listed in Hong Kong soared 2.8%, with food-delivery firm Meituan up more than 5%.

** For the week, “… (market) sentiment dropped amid COVID-19’s resurgence in multiple cities in China,” said Morgan Stanley in a note.

** “Further earnings downside, housing market uncertainty, COVID-19 policy outlook and lack of clarity on macro troughing out are worth watching and are likely to keep market sentiment range-bound in the coming weeks into November.”

** China’s National Health Commission (NHC) announced a raft of new measures to further strengthen the existing anti-virus measures.

** Separately, new yuan loans in China are expected to have more than doubled in August from July when lending dropped from the record pace in the first half of the year, a Reuters poll showed, as the central bank moves to support the COVID-ravaged economy.