China, HK stocks gain as banks extend rally; chips also gain

HONG KONG: China and Hong Kong stocks gained on Tuesday, led by a bank rally, while tech shares rose despite the new US trade curbs on Chinese chips.

China stocks mixed as banks rally

• At the midday break, the Shanghai Composite index gained 0.68% to 3,374.18 points and the blue-chip CSI300 index jumped 0.75%.

• Hong Kong’s Hang Seng Index added 1.08% to 20,098.29 - a near two-week high. It has rallied 18% so far this year, ranking among the best performers in major global markets.

• Financial markets in Hong Kong will be closed on Tuesday afternoon through Thursday for a local holiday. Trading will resume on Friday.

• Leading gains onshore, banks extended Monday’s rally as investors continued to seek shelter in high dividend-yielding assets amid falling bond yields. The gauge tracking the sector added 0.8% to over a two-month high.

• China’s four biggest state-owned banks - Industrial and Commercial (ICBC), Bank of China (BOC) China Construction Bank (CCB) and Agricultural Bank of China (ABC) - gained between 0.3% and 1% to hit multi-year highs.

• Yields on China’s long-dated government bonds, including the 10-year and 30-year ones, hovered near record lows at 1.69% and 1.95%, respectively, as investors headed into 2025 betting on no sharp recovery in the economy.

• Chips pared losses to rise 0.3% after the Biden administration announced a last-minute trade investigation into older China-made “legacy” semiconductors that could heap more US tariffs on Chinese chips.

• The risk appetite has improved following Beijing’s policy shift, but the market is set to stay volatile with constant thematic rotations until more concrete data on fundamental improvements emerge next year, analysts at TF Securities said.

• China and Hong Kong are looking to end 2024 a multi-year slump and close on a high, thanks to Beijing’s stimulus blitz from September.

• Around the region, MSCI’s Asia ex-Japan stock index firmed 0.36%, while Japan’s Nikkei eased 0.33%.

• Chinese ADRs advanced 0.91% overnight.