SHANGHAI: China and Hong Kong stocks ended higher on Wednesday, led by financial shares, as analysts said new rules on fund performance evaluation could enhance underweight index components, while investors shifted their focus to tech earnings as US-China trade tensions eased.
China’s blue-chip CSI300 Index closed up 1.2%, while the Shanghai Composite Index gained 0.9%. Hong Kong benchmark Hang Seng was up 2.3%.
Banks and insurance shares led the rally onshore, with the CSI300 Financial Index up 2.2%. Last week, China unveiled mutual fund regulations which require funds to set clear performance benchmarks.
Strengthened performance benchmarks may lead mutual funds to increase allocations to index component stocks, reducing style drift and tracking errors, analysts at Huafu Securities said in a note. Bank shares are a key component of the CSI300 Index.
Meanwhile, China said on Wednesday it would further enhance capital market support for science and technology innovation enterprises and would expand bank credit support for the firms.
Chinese stocks have recovered all their losses, triggered by US President Donald Trump’s punitive tariff measures imposed on April 2.
“With the most extreme uncertainties out of the way, we think fundamentals will be a more important driver of share price performances going forward and it is time to dial-up the risk setting,” said UBS strategist James Wang.
Wang favored the internet sector and shares traded in Hong Kong over those listed in mainland China.
Tencent and Alibaba rose 3.0% and 3.4%, respectively, on Wednesday as investors awaited their earnings due later in the day and on Thursday.
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