INSUBCONTINENT EXCLUSIVE:
SHANGHAI: Chinese stocks rebounded across the board on Thursday as investors snapped up healthcare and property shares battered by a recent
selloff, while tech firms rallied on hopes of more government support.
Assistance for the tech sector would mark the latest in a series of
growth boosting measures being rolled out by Beijing as an escalating trade war with the United States puts more pressure on China's
already slowing economy.
The Shanghai Composite index ended 1.9 per cent higher, while China's blue-chip CSI300 index closed up 2.5 per
cent, recouping Wednesday's losses.
Gains were broad based, with the CSI300's financial sector sub-index rising 2.3 per cent, consumer
staples up 3 per cent, real estate up 3.9 per cent and healthcare up 3.8 per cent.
Those sectors have been badly mauled in a summer selloff
triggered by the Sino-US trade dispute, worries over slowing economic growth and fears of more curbs to cool property prices.
Healthcare
stocks have sunk in the wake of a vaccine scandal
Even after Thursday's rebound, the healthcare index is down nearly 14 per cent since mid-July.
"We could have overestimated the downside
risks for the economy, judging from recent economic data including the exports which are not that bad," said Wang Mingli, an analyst with
Guoyuan Securities.
China's exports surged more than expected in July despite the imposition of US tariffs, but more duties are on the
way.
Beijing late on Wednesday said it would slap additional tariffs of 25 per cent on $16 billion worth of US imports, in retaliation to
news the United States plans to begin collecting 25 per cent extra in tariffs on $16 billion of Chinese goods from Aug
23.
However, the latest volley in the trade war did little to dampen investor enthusiasm on Thursday as investors bet on further government
support measures.
China's securities regulator said on Wednesday that it would revise regulations to ease companies' access to capital
markets and expand the scope of foreign investment.
Technology shares gained after China said it would revamp a national leadership group
charged with planning and studying its key technological development strategies, signalling the possibility of policy shifts that could
benefit China's tech sector.
The tech-heavy ChiNext Composite index jumped 3.4 per cent, and the Shenzhen index was up 2.7 per cent.
But
Gao Ting, head of China Strategy at UBS Securities, cautioned against expectations of widespread government support for the market.
"We
think the extent of policy loosening this time is likely to be constrained by the government's deleveraging policy stance and concerns of
a housing bubble," Gao said in a note, referring to Beijing's multi-year campaign to reduce risks in the financial system and tackle a
mountain of corporate debt.
"A delicate policy balance is needed to reduce the risk of a hard-landing and also to avoid excessive
stimulus."
In Hong Kong, the Hang Seng index was up 0.8 per cent while the China Enterprises index gained 1 per cent
The Hang Seng's IT sector sub-index rose 2.6 per cent
In currency markets, the yuan strengthened after the central bank left the midpoint
of the currency's daily trading band essentially unchanged.
At 0719 GMT, the yuan was changing hands at 6.8278 per dollar, 40 pips firmer
than the previous onshore close of 6.8318.
Traders said the yuan was slightly stronger as cautious investors liquidated long dollar
positions, as they were wary of any potential policy moves to stabilise the Chinese currency.
Several market participants said that
Thursday's slight strengthening does not mean the yuan's downward trend has ended.
A Reuters poll on Thursday found market expectations
that the yuan will regain some of its recent losses against the dollar, but only if the trade war between the US and China eases.