China stocks close up after state fund boosts stakes in banks

13 Oct, 2023

SHANGHAI: Chinese shares closed higher on Thursday after a state fund increased its stakes in the country’s biggest banks, following a slew of stimulus measures to revive the flagging stock market.

China’s blue-chip CSI 300 index ended the session up 1%, while the Hang Seng Index climbed 1.9%.

Broader Asian shares also rose, as markets wagered that US rates have peaked after more dovish remarks from Federal Reserve officials, while traders awaited the US consumer inflation report later in the day for further monetary policy clues.

China’s “Big Four” state banks said late on Wednesday that their controlling shareholder Central Huijin Investment bought their Shanghai-traded shares, and plans to further increase its holdings in the next six months.

“The ‘real money’ by Central Huijin is of great significance to the stock market,” said Yang Delong, chief economist at First Seafront Fund Management.

“It sent a strong signal of ‘continuous investment’ in the market. This will play an important and positive role in boosting investor confidence.” Shares of banks climbed 1.8%, while insurers added 2.9%. New energy companies and automobile firms advanced 2.6% and 3.4%, respectively.

Meanwhile, tech companies listed in Hong Kong rose 1.7%.

Investors are awaiting more economic indicators due later in the week, including new yuan lending and trade data for September, to gauge the recovery momentum in China.

Shuang Ding, chief economist at Standard Chartered Bank, said market consensus may have underestimated China’s economic growth in the third quarter.

“For Q3 GDP (to be released on Oct. 18), the consensus forecast is currently 4.5%, we think an outcome of around 5% is more likely based on available data for July and August and consensus estimates for September real activity,” Ding said.

Sentiment was also boosted by signs of improvement in Sino-US relations, after the United States said it accepted an invitation to attend China’s top annual security forum in late October.

Overseas investors bought a net 6.6 billion yuan ($904.39 million) of Chinese shares via the Stock Connect on Thursday, following a four-session selling streak.

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