China stocks extend gains on rebound hopes, cheaper valuations

HONG KONG: Hong Kong and China stocks rose on Wednesday, lifted by hopes of a strong economic rebound from the COVID-19 pandemic and discounted values of stocks. ** China’s blue-chip CSI 300 index climbed 0.22%, while the Shanghai Composite Index edged up 0.2%.

** Hang Seng Index rose 1.02% and Hang Seng China Enterprises Index jumped 1.12%.

** Asian equities edged higher on Wednesday, while the dollar steadied as investors braced for US inflation data that could influence the Federal Reserve’s interest rate stance.

** Meanwhile, Chinese banks extended 1.4 trillion yuan ($206.7 billion) in new yuan loans in December, up from November and beating analysts’ expectations, according to data released by the People’s Bank of China.

** China’s central bank and top banking regulator also said they will increase financial backing for the domestic demand and supply system to support the economy, while ensuring steady and orderly financing to the property sector.

** China markets have one of the best starts for years in January with Hang Seng Index jumping 9% so far this year, while Shanghai Composite Index up 3%.

** The CSI 300 has rebounded roughly 15% since November on bets around economic reopening in China. In a policy U-turn, the country dropped its zero-COVID policy in early December.

** Investors also believe the valuation is still attractive.

China stocks wobble amid doubts around sustainability of rally

** “It has been two years of China being in a very bad market, underperforming not just global markets, but also Asia-Pacific markets,” Nicholas Yeo, head of China equities at abrdn, told reporters at an outlook briefing.

** “There is still a lot of room for valuation to return to more normal level. We are currently looking at valuation that is probably around 30-35% discount to the 15 year-average.”

** Core stocks and property developers led the gains, rising 2.8% and 2% respectively.

** In Hong Kong, tech giants’ rally sustained. The Hang Seng Tech Index advanced 1.1%, while Alibaba and Tencent jumped 3.6% and 2.9 respectively.

** E-commerce giant Alibaba Group has signed a cooperation agreement with the government of Hangzhou, the city where the company is headquartered, local media reported on Tuesday.