SHANGHAI: Stocks in mainland China were largely flat on Thursday, as gains in banks and miners countered concerns over the fiscal health of the world’s largest economy, which has dragged Hong Kong and its regional peers lower.
Investors turned risk-off after sharp declines on Wall Street and a spike in longer-dated US Treasury yields, while US President Donald Trump tried to push his sweeping spending and tax-cut bill through Congress.
China, HK shares end higher, supported by mining and battery stocks
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At the midday break, the Shanghai Composite index was flat at 3,387.63 points, while the blue-chip CSI300 index was up 0.13% at 3,921.28 points.
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Banks outperformed, leading gains in morning deals, with the sub-index rising 0.85%.
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China’s recent decision to lower key rates, including deposit interest rates at major state-owned lenders, was expected to guide smaller lenders with similar moves to alleviate their shrinking interest margin pressure.
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Meanwhile, mining-related shares climbed, as investors rushed to safe-haven assets, such as gold, following mounting concerns over the US government’s growing debt. Western Region Gold rose 3.38% at the midday break.
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Hong Kong’s benchmark Hang Seng Index lost 0.55% to 23,695.88 points, while the Hang Seng China Enterprises Index fell 0.48% to 8,619.15 points.
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Around the region, MSCI’s Asia ex-Japan stock index eased 0.56%. Japan’s Nikkei index shed 1.09%.
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Wendy Liu, chief China equity strategist at J.P. Morgan, said she’s optimistic about A shares, despite expecting their peers in Hong Kong to outperform due to valuations.
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Liu expects the CSI300 index to climb to 4,150 points, or nearly 6% higher than the current level, in the base-case scenario, while hitting 4,420 points as a more positive outcome and 3,800 points in a more bearish case.
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She recommends buying internet and healthcare stocks and rates utilities and energy industries as “underweight”.
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