China, Hong Kong stocks rise on hopes of more stimulus
China will roll out more stimulus to support a slowing economy, but concerns over debt and capital flight will keep measures targeted
BEIJING: Chinese and Hong Kong stocks rose on Friday, as investor sentiment was lifted on hopes of more stimulus after the People's Bank of China cut a few key policy rates this week.
** China's blue-chip CSI300 Index and the Shanghai Composite Index both climbed 0.4% by the lunch break.
** Hong Kong's benchmark Hang Seng Index was up 0.7%, while the China Enterprises Index added 0.6%. ** China will roll out more stimulus to support a slowing economy, but concerns over debt and capital flight will keep measures targeted at shoring up demand in the consumer and private sectors, sources involved in policy discussions said.
** Meanwhile, Wall Street Journal reported that Beijing is considering issuing roughly one trillion yuan ($140.17 billion)of special treasury bonds to help indebted local governments and boost business confidence. ** However, UBS Senior China Economist Ning Zhang told investors on Friday that China was unlikely to issue such bonds anytime soon, unless its economy deteriorated sharply and exports weakened much more than expected. The bank also lowered China's 2023 GDP growth forecast to 5.2% as the analysts saw second-quarter growth softer than expected.
** Nevertheless, the market was fueled by stimulus hopes. ** Trading volume rose on investors' higher hopes for easing, was supported by open market operations and medium-term policy loan rate cuts, Morgan Stanley analysts said in a note, adding they expect more easing efforts toward late June or early July, which would be crucial for confidence revival.
** Sector-wise, artificial intelligence (AI) related stocks led the gains, with Kunlun Tech up more than 12%. ($1 = 7.1342 Chinese yuan renminbi)