China, Hong Kong stocks rise on China recovery hopes

SHANGHAI: China and Hong Kong stocks climbed on Monday as risk appetite improved on hopes of the economy gradually shifting from reopening to recovery, outweighing geopolitical tensions between US and China.

** China’s blue-chip CSI300 Index climbed 1.2% by the lunch break and the Shanghai Composite Index gained 1%. Hong Kong benchmark Hang Seng was up 0.8%.

** Investor sentiment held up strong on Monday with market participants picking up cues for recovery activities and growth potential from corporate earnings.

** “High-frequency data shows traffic congestion and subway crowds in big cities have rebounded to a near-normal level. In Tier-1 cities, secondary property transactions have been returning strongly,” said Hao Hong, chief economist at Grow Investment Group.

** Goldman Sachs still expected a roughly 20% price return from Chinese stocks over the next 12 months, after the MSCI China corrected 9% downwards in the past month, and prompted investor questions about the durability of the reopening-led rally.

** The Wall Street bank believes the principal theme in the stock market will gradually shift from reopening to recovery, with the driver of the potential gains likely coming from earnings growth.

China, HK stocks fall as US data cloud China’s recovery hopes

** Shares of Chinese brokerages rallied 1.9% after China’s securities watchdog said it implemented the new registration-based initial public offering system on Friday, aiming to encourage new listings and boost corporate fundraising.

** China International Capital Corp surged 4.3% and CITIC Securities added 2%.

** Among sectors, China CSI Financials Index and the CSI 300 Real Estate Index both rallied nearly 1.9%.

** Tech giants listed in Hong Kong gained 1.1% despite lingering Sino-US tensions.

** US Secretary of State Antony Blinken on Saturday warned top Chinese diplomat Wang Yi of consequences should Beijing provide material support to Russia’s invasion of Ukraine.

** “The meeting between Wang Yi and Antony Blinken on the weekend did little to ease tensions between the two and instead added more fuel to the fire,” Maybank said in a note.