SHANGHAI: Mainland China and Hong Kong stocks ended marginally higher on Monday as investors grew cautious ahead of key events next week, including a legislative meeting in Beijing and the US presidential election.
At the close, the Shanghai Composite index was up 0.68% at 3,322.20 points, while the blue-chip CSI300 index was up 0.2%.
The consumer staples sector rose 1.55%, while the real estate index jumped 2.22%.
In Hong Kong, at the close of trade the benchmark Hang Seng index had inched higher by 0.04% to 20,599.36 points. The Hang Seng China Enterprises index rose 0.08% to 7,391.22 points.
Republican former President Donald Trump and Democratic Vice President Kamala Harris are polling neck-and-neck in crucial swing states ahead of the Nov. 5 election. Investors are anxious about a contested result roiling world markets and unleashing fresh geopolitical uncertainty.
“With US elections on the horizon and global volatility already heightened, taking on additional exposure to volatile Chinese assets may seem less attractive for now,” said Tommy Xie, head of Greater China research at OCBC Bank.
China’s top legislative body will meet from Nov. 4-8, state news agency Xinhua said on Friday, although the agenda made no mention of highly anticipated measures on debt and fiscal stimulus.
Beijing is counting on massive financial stimulus announced in September to kickstart lending and investment, as a sharp property market downturn and frail consumer confidence weigh on investor sentiment.
The PBOC, which has steadily reduced interest rates and injected liquidity, is under pressure to do more to ensure the economy grows at the government’s target of around 5% this year.
China stocks have gained for two weeks and the CSI 300 index is up 23% since Sept. 24, when Beijing kicked off its rate cuts and soon followed through with other stimulus proposals to bolster the property sector and consumer demand.
“Overall, the market has shifted from its initial excitement to a more cautious ‘wait and see’ stance, becoming increasingly data-dependent,” said OCBC’s Xie.
Lei Meng, China equity strategist at UBS Securities, added: “In the medium term, we think whether the market can achieve a sustainable uptrend depends on the magnitude of fiscal and relevant policies, and the pace of the corporate earnings recovery.”
Earlier in the day, China’s central bank launched a new liquidity tool to inject more cash into the market and support credit flow in the banking system ahead of the expiration of trillions of yuan in loans at the end of the year.
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