SHANGHAI: China’s blue chips rose to a 4-1/2-year high on Monday, aided by improving earnings outlook and strong risk appetite, although Hong Kong shares fell as caution over US interest rates and a surge of post lock-up supply weighed.
China’s blue-chip CSI300 index climbed 2.4 percent to its highest level since December 2021, while the Shanghai Composite Index rose 1.8 percent, marking its strongest performance in two months.
In Hong Kong, Hang Seng dropped 0.7 percent.
Middle East tensions eased as the first round of talks between the US and Iran in Switzerland ended on Monday, and investors shifted their focus to the prospects of higher US interest rates. A possible US monetary tightening has a greater impact on Hong Kong stocks than on China’s A-shares, as Beijing maintains strict capital controls.
“We remain overweight A-shares versus offshore markets,” Morgan Stanley said in a note, citing greater exposure to hard tech and support from the state-backed “National Team” of investors.
Meng Lei, China strategist at UBS Securities, said he expects an 11 percent earnings growth for A-shares this year, up from 3.9 percent in 2025.
“We think the rollout of more supportive policies, progress in anti-involution and rising contribution of overseas revenue can help margin expansion,” he said.
Meng also pointed to signs of growing risk appetite in China, including a continuous shift of household deposits into stocks and a record-high margin financing.
On Monday, brokers, new energy stocks and chipmakers led the gains in China.
But Hong Kong stocks fell as the release of locked-up shares looms following a boom in initial public offerings. Tech shares lost 1.2 percent.
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