Hopes of Additional Supportive Measures Lift China Indexes

Li Chen
04 Jun, 2024
Hong Kong

Market indexes in Hong Kong and Shanghai advanced, and the yuan faced headwinds as investors debated the strength of the economic recovery. 

The CSI 300 and Hang Seng indexes edged up in active trading as investors hoped policymakers were preparing to provide additional measures to support financial and property markets. 

Despite the recent flurry of announcements from the People's Bank of China, regulatory agencies, and leading policymakers, little has changed on the ground.

Consumer sentiment remains cautious amid weak job markets and an uneven economic recovery, which has generally bypassed small and medium businesses. 

Moreover, the announced measures to support the property market have failed to revive transactions and improve liquidity among large developers.

Foreign investors are also avoiding Chinese stocks, despite their cheap valuation and stable earnings, because of ongoing geopolitical tensions, regulatory uncertainty, and the government's policy favoring large domestic companies. 

The Chinese yuan traded around 7.25 against the U.S. dollar, and the yield on China's 10-year government bond held at 2.3% after a private survey showed activities in the manufacturing sector accelerated in May, contrasting the government survey showing a decline. 

 

China Stock Movers 

The CSI 300 index increased 0.4% to 3,602.60, and the Hang Seng Index advanced 0.2% to 18,441.59. 

Banks generally traded higher in Shanghai and Hong Kong in the hopes that the People's Bank of China may ease requirements for mortgage loans. 

Bank of China decreased 3.7% to HK$3.70, China Merchants Bank gained 0.1% to $35.30, and ICBC decreased 0.7% to $4.44. 

Vehicle makers traded higher ahead of international trade statistics later in the week, and investors are hoping that exports of electric vehicles are likely to sustain elevated growth. 

Li Auto fell 2.9% to $79.95, BYD added 0.4% to $231.40, and Xpeng decreased 1.3% to $32.25. 

Internet companies edged higher in Hong Kong as foreign investors searched for bargains in beaten-down stocks. 

Tencent Holdings increased 0.6% to $377.20, Meituan jumped 4.2% to HK$113.50, and Alibaba Group decreased 1.3% to HK$76.25. 

Property stocks advanced in the hopes of additional measures to improve liquidity among large developers. 

China Vanke, the largest residential developer in China, said sales in May increased from the prior month by 11.2% to US$3.2 billion. 

China Vanke jumped HK$5.75, China Resources Land added 3% to HK$30.10, and Longfor Group added 3.3% to HK$12.98.