China, Hong Kong shares rebound on chip gains, strong earnings

HONG KONG: Chinese and Hong Hong stocks ended higher on Tuesday, driven by gains in chip stocks and positive earnings reports, even as investors awaited fresh directional cues.

China, HK stocks rise on regulator guidelines; tariff threat looms

• The Shanghai Composite index and the blue-chip CSI 300 index both closed 0.7% higher, after hitting two-week lows earlier in the session.

• Hong Kong’s benchmark Hang Seng Index climbed 0.4%.

• Chip stocks led mainland markets higher, with an index tracking the sector advancing 3%.

• China’s biggest chipmaker Semiconductor Manufacturing International Corporation jumped 2.8% from a two-week low, and peer Hua Hong Semiconductor rallied 3.5%.

• In Hong Kong, shares in Trip.com surged 5.8%, the largest daily gain in five weeks, after the travel platform reported better-than-expected third-quarter revenue.

• “Given going into Trump 2.0, investors will focus more on China’s domestic sectors as they are expected to be stimulated by the government to offset the potential drag on exports from the expected higher tariffs,” Kelly Chung, chief investment officer of multi assets at Value Partners, said in a note.

• The bullish sentiment has eased and trading volume has thinned since last week, as investors sought fresh direction, either from Chinese economic data, news on the makeup of the next US administration, or further plans in Beijing to aid China’s ailing economy.

• “Chinese stocks have relapsed in the past two weeks, breaking down from the holding pattern that was in place after the September rebound,” analysts at Alpine Macro said in a note.

• “The message from the market is that Beijing needs stronger policy easing to counter external shocks.”

• The communication services sector led losses in mainland shares, with China Unicom tumbling 5.5% and China Telecom declining 3.3%.

• The real estate sector drifted lower, unmoved by property tax breaks rolled out in Shanghai. The CSI 300 Real Estate Index lost 0.3% while the Hang Seng Mainland Property Index fell 0.2%. Reuters