China, HK stocks rebound as report on Beijing’s new budget deficit plan lifts sentiment

HONG KONG: China and Hong Kong stocks rebounded on the day from Tuesday’s decline, as a Reuters report on China planning a record budget deficit for 2025 and Beijing’s call for state-owned companies to boost market value lifted sentiment.

China, HK stocks sink as lack of stimulus details

• At the midday break, the Shanghai Composite index rose 0.72% to 3,385.64 points after dropping 0.73% on Tuesday to close at the lowest since Nov. 29, while China’s blue-chip CSI300 index gained 0.52%.

• Chinese H-share index in Hong Kong, the Hang Seng China Enterprises Index, added 0.86% to 7,166.5.

• The Hang Seng Index advanced 0.58% at 19,815.30. It lost 0.5% in the last session. ** Most sectors gained by midday, led by semiconductors and state-owned firms adding 2% and 1.2%, respectively.

** State-owned firms listed in Hong Kong climbed 0.8%.

• The rally comes after the State-owned Assets Supervision and Administration Commission (SASAC) on Tuesday issued guidelines, urging state-owned firms to improve market value management of listed companies, including measures such as mergers and acquisitions, information disclosure and stock buy-backs.

• Investors raised bets of more forceful fiscal stimulus next year after a Reuters report said Chinese leaders have agreed to raise the budget deficit to 4% of gross domestic product (GDP) next year, highest on record, while maintaining an economic growth target of around 5%, citing sources.

• Morgan Stanley called the potential plan positive, citing the report.

• “Beijing is willing to set a high growth target and record fiscal budget to boost market confidence,” the brokerage said, adding that details will unlikely be known until March.

• The smaller Shenzhen index gained 0.74%, the start-up board ChiNext Composite index added 0.11% and Shanghai’s tech-focused STAR50 index jumped 1.16%.

• Around the region, MSCI’s Asia ex-Japan stock index firmed 0.27%, while Japan’s Nikkei index slipped 0.54%.

• Chinese ADRs rose 1.97% overnight.

• The yuan was quoted at 7.2851 per US dollar, 0.02% weaker than Tuesday’s close of 7.284.