China stocks rise on construction, rare earth gains; HK tests 3-1/2-year high

HONG KONG: China stocks hitmulti-month highs on Monday, led by rare earth and construction sectors, while Hong Kong shares rose as tech stocks rallied following a government rebuke on price wars.

• At the midday break, the Shanghai Composite index rose 0.4% to 3,549.89, the highest since last October. China’s blue-chip CSI300 index added 0.2% to a seven-month high.

• Leading the gains, the CSI Construction & Engineering Index jumped as much as 4% after China began construction of a $170 billion hydropower dam in Tibet.

• The rare earth sector advanced nearly 3% following a Reuters report that Beijing has quietly issued its first 2025 rare earth mining and smelting quotas.

• Positive catalysts from anti-involution policies and strength in the tech sector lifted sentiment, while a solid economic foundation fuelled the market rally that’s surprising in its timing yet reasonable, Huatai Securities said.

• Hong Kong’s benchmark Hang Seng Index grew 0.3% after briefly topping the 25,000 level for the first time since February 2022.

• Platform companies Meituan, JD.com and Alibaba rose between 1.8% and 2.8% after Beijing summoned the three and asked them to cool a bruising price war in an ongoing “anti-involution” campaign.

• This came after regulators called for “rational competition” in the auto and food delivery sectors to regulate intense price wars and promote sustainable development, dubbed by investors as an “anti-involution” campaign.

• weighing on gains in Hong Kong.

• Looking ahead, Chinese policymakers are expected to hold the July Politburo meeting in the coming days to discuss economic policies for the second half of this year.

• “They may reiterate their pledge to boost domestic demand and to stabilise exports, employment and the property market” instead of rolling out broad-based, significant stimulus in the near term, analysts at Goldman Sachs said.

• They also anticipate continued policy pledges to regulate disorderly price competition and contain the “involution”.