Economic news

HK, China Stocks Rebound as Beijing Calms Panic

SHANGHAI, July 29 (Reuters) - Hong Kong and China stocks rebounded sharply on Thursday led by the tech sector, after Beijing moved to soothe investor panic over mounting regulatory risks.

China’s blue-chip CSI300 Index gained 1.4% by the midday break but is still down over 5% so far this week. The Shanghai Composite Index rose 1%, reducing the week’s loss to 4.3%.

In Hong Kong, the Hang Seng Index jumped 2.7%, and the Hang Seng Tech Index, the target of heavy selling recently, soared 6.8%, but is still down 5.3% for the week.

Global investors had dumped shares in Chinese companies after Beijing published rules over the weekend that ban for-profit tutoring in core school subjects. China has also launched an anti-monopoly campaign against tech giants.

On Wednesday night, the China Securities Regulatory Commission (CSRC) held a meeting with executives of top global investment banks in a bid to calm financial markets nerves, people familiar with the matter told Reuters.

In what appears to be a coordinated effort, state media including Xinhua, the China Securities Journal and the China Daily all published commentaries arguing local stock and bond markets remain attractive to investors, and that the country was still committed to opening up.

Also aiding sentiment, China’s central bank injected more liquidity into the banking system via open market operations on Thursday than it did during the past month’s daily operations.

“Market despair creates buying opportunities,” said Xie Chen, fund manager at Shanghai Jianwen Investment Management Co.

“In the darkest time, you must be convinced that the sun will rise tomorrow,” said Xie, who bought Tencent shares during the sell-off earlier in the week.

“Fear overdone,” Citi said in a note on Thursday, adding that recent tightening against after-school tutoring and internet firms will lead to healthier, rational development in the long-term.

Tech and education shares, which suffered the brunt of the sell-off earlier this week, staged a sharp rebound.

Shenzhen’s start-up board ChiNext jumped 4.1%, recouping much of this week’s savage losses, and an index tracking China and overseas-listed education stocks surged 4.2%.

But China’s property shares fell amid lingering concerns over the industry’s financial health, while airline stocks were weak amid signs China’s COVID cases are on the rise.

(Reporting by Shanghai Newsroom; Editing by Sam Holmes)

Source: Reuters

 


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