SHANGHAI: China stocks closed down on Wednesday following a strong rally in the previous session as investors were cautious, awaiting additional government stimulus measures, while Hong Kong shares were marginally up.
China’s blue-chip CSI300 Index dropped 0.6%, while the Shanghai Composite Index lost 0.4%. Hong Kong benchmark Hang Seng rose 0.3%.
“Ample liquidity in the banking system, and a relative lack of credit demand, means that interest rates will likely remain low and could fall further. Therefore, investors have generally remain cautious about jumping into riskier assets,” HSBC chief Asia economist Frederic Neumann said.
“While equities have been volatile of late, an improving growth outlook, especially with stepped-up stimulus measures should ultimately offer support.”
Onshore stocks surged on Tuesday, marking their largest gain in more than two months, as regulators pledged more support to arrest the market slump. However, many market participants expect a period of policy vacuum until the National People’s Congress in March. As geopolitical tensions escalated, domestic investors picked sectors that are independently innovative.
Hong Kong-listed shares of Semiconductor Manufactu-ring International Corp, China’s biggest chipmaker, surged nearly 6% to their highest since July 2020.
The surge followed the announcement on Monday that the US would further restrict exports of artificial intelligence chips and technology.
Rick Waters, former China policy official at the US Department of State, said at a UBS conference Washington and Beijing are trying to find an equilibrium but there will be lots of volatility until that is reached.
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