FILE PHOTO: An electronic board shows stock indexes at the Lujiazui financial district in Shanghai, China, March 21, 2023. REUTERS/Aly Song/File Photo
SHANGHAI;- China stocks slipped on Tuesday, hovering near a five-year low hit in the previous session, while Hong Kong shares rallied after the country's cabinet pledged to take more effective measures to stabilise market confidence.
The cabinet meeting, chaired by Premier Li Qiang, said on Monday it will step up medium- and long-term fund injections in the capital market to strengthen stability as well as promote healthy development.
Risk appetite was further lifted by a Bloomberg News report that policymakers are seeking to mobilize about 2 trillion yuan ($278.53 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link.
Still, the Shanghai Composite Index remained below the psychologically key 2,800-point mark, and the CSI300 gave up early gains, highlighting extremely fragile investor sentiment as the Chinese economy sputters and authorities appear reluctant to release major stimulus.
The blue-chip CSI 300 Index was down 0.2% at midday recess, and the SSEC fell 0.4%, while the Hang Seng Index jumped 2.5%.
China's yuan also rebounded from a near two-month low against the dollar hit a day earlier to the strongest in more than a week.
"Top officials' comments suggest Beijing is reluctant to seek short-term growth at the cost of increasing long-term risks," said Nomura analysts in a note, referring to stimulus prospects. "We expect the current economic dip to continue into spring this year."
Liang Zhu, chief investment officer at AllianceBernstein in China, said "what happened in China markets in recent days might be the 'last drop' investors could experience."
"As a long-only investor, we are very optimistic, it's almost the freezing point and the government will take action," he said.
Foreign investors bought a net 2.8 billion yuan ($390.40 million) of China stocks so far on the day.
Tech giants listed in Hong Kong and mainland property developers soared roughly 4% each to lead the gains. In mainland markets, new energy shares added 1.4%.
China anime comic gaming stocks climbed 2.3% after the gaming regulator took down draft rules to control spending in video games from its website, checks by Reuters showed. - Reuters
