Chinese stocks fluctuate as traders await policy support measures

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Hong Kong-listed Chinese stocks swung between gains and losses on Monday as traders awaited further policy support from authorities after the prime lending rate remained unchanged.

The Hang Seng China Enterprises Index fell 0.4% after gaining 2.2% in early trading. The Hang Seng Technology Index, which tracks China’s biggest tech companies, rose 3.3% before trading little around 10 a.m. in Hong Kong.

??Traders are waiting to see what policy support the authorities will offer after Chinese lenders left the prime lending rate unchanged on Monday. Speculation of further monetary easing rose after a top financial committee led by Vice Premier Liu He pledged on March 16 to make monetary policy more “proactive” to support the economy in the first quarter. and stabilize financial markets.

“Some may have clung to expectations of a reduction in the LPR today, which I think will come later when they assess the slowdown in growth due to the epidemic,” said Wai Ho Leong. , strategist at Modular Asset Management. “The peace talks and the Xi-Biden call have also failed to yield substantial results.”

This morning’s volatility follows the roller coaster ride of last week, when the Hang Seng Index of Chinese companies initially plunged on concerns about close ties between Beijing and Moscow and fears that the United States could withdraw from the list of Chinese companies. The gauge then jumped 21% in two days, the most since 1998, after authorities pledged to stabilize markets and ease regulatory clampdowns.

A Bloomberg Intelligence gauge tracking Chinese property companies fell 2.4%. Moody’s said Beijing’s support measures would not defuse default risks for developers and that debt-ridden Chinese group Evergrande suspended operations.

Traders are also weighing conclusions following a meeting between Presidents Xi Jinping and Joe Biden on Friday. China’s top envoy to Washington has promised that his country will “do everything” to defuse the war in Ukraine.

On Monday, the state-run Chinese Securities Journal continued to urge investors to be optimistic about the local stock market due to political support. The newspaper also reported that about 30 Shanghai-listed companies offered nearly 10 billion yuan ($1.6 billion) in share buybacks this month to boost confidence.

(Bloomberg)

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