China stocks set for weekly gains on stimulus hopes, despite Sino-U.S. tensions

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* SSEC 0.0%, CSI300 0.0%, HSI -0.7%

* HK->Shanghai Connect daily quota used -0.4%

* Shanghai->HK daily quota used 1.5%

* FTSE China A50 -0.3%

SHANGHAI, May 29(Reuters) – China stocks were little changed on Friday, but were on track for weekly gains despite rising Sino-U.S. tensions, on expectations Beijing will take necessary measures to underpin the world’s second-largest economy.

** At the midday break, the Shanghai Composite index was up 0.01% at 2,846.41 points.

** China’s blue-chip CSI300 index was up 0.01%, with its financial sector sub-index lower by 0.91%, consumer staples sector rose 1.03%, real estate index fell 2.28% and healthcare sub-index gained 0.83%.

** Chinese H-shares listed in Hong Kong fell 0.23% to 9,529.79, while the Hang Seng Index was down 0.71% at 22,968.41.

** For the week, SSEC and CSI300 were set to gain 1.2% and 0.9%, respectively.

** China has room to stimulate an economy trying to recover in the wake of the coronavirus pandemic, but the government does not want to open the “floodgates”, Premier Li Keqiang said on Thursday at the end of the annual meeting of parliament.

** “We have reserved policy room. Be it fiscal, finance, or social security,” Li said.

** Leading the gains for the week, the tech-heavy start-up ChiNextP was up 1.5% by midday, as investors anticipated robust support from Beijing to bolster its technology sector amid U.S. restrictions.

** China needs to upgrade its economy as it is in a key in-depth transformation period, said Li Bingyang, chairman of Hangzhou Zhuhangusong Capital, adding he expected continued support for the country’s technology sector.

** However, rising tensions between China and the United States curbed gains in the market.

** U.S. President Donald Trump is due to announce later on Friday his response to the Chinese parliament’s advancement of security legislation for Hong Kong, which many lawyers, diplomats and investors fear could erode the city’s freedoms.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.44% while Japan’s Nikkei index was down 0.33%.

** The yuan was quoted at 7.1503 per U.S. dollar, 0.08% weaker than the previous close of 7.1447.

** As of 04:01 GMT, China’s A-shares were trading at a premium of 26.64% over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Shounak Dasgupta)

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