SHANGHAI: Stocks in China and Hong Kong rose on Friday in their best weekly performance in five months, as investor sentiment was warmed by hopes for more stimulus after the People’s Bank of China cut a few key policy rates this week.
China’s blue-chip CSI300 Index closed up 1.0% and the Shanghai Composite Index climbed 0.6%.
Hong Kong’s benchmark Hang Seng Index was up 1.1%, while the China Enterprises Index added 0.9%.
For the week, CSI300 Index and Hang Seng Index added 2.8% and 3.4%, respectively, for each its best weekly performance in five months.
China will roll out more stimulus to support a slowing economy, but concerns over debt and capital flight will keep measures targeted at shoring up demand in the consumer and private sectors, sources involved in policy discussions said.
The Wall Street Journal said Beijing was considering issuing roughly one trillion yuan ($140.17 billion) of special treasury bonds to help indebted local governments and boost business confidence.
However, UBS Senior China Economist Ning Zhang told investors on Friday that China was unlikely to issue such bonds anytime soon, unless its economy deteriorated sharply and exports weakened much more than expected. The bank also cut its forecast for China’s GDP growth in 2023 to 5.2%, as the analysts saw second-quarter growth softer than expected.
Nevertheless, stimulus hopes fuelled the market.
Trading volume rose on the higher hopes for easing, was supported by open market operations and medium-term policy loan rate cuts, Morgan Stanley analysts said in a note. They added that they expected more easing efforts toward late June or early July, which would be crucial for confidence revival.
Sector-wise, stocks related to artificial intelligence (AI) led the gains, with Kunlun Tech up 11.6 percent.