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China stocks firm as banks lend support; Hong Kong up

SHANGHAI, Aug 4 – China stocks firmed on Tuesday, driven by strong gains in banks as investors cheered Beijing’s latest move to ease pressure on the country’s financial institutions.

** The CSI300 index rose 0.1% to 4,775.13 points at the end of the morning session, while the Shanghai Composite Index firmed 0.1% to 3,371.00 points.

** Banks led the gains, with the CSI300 banks index up 2.1% by the midday break and bellwether Bank Of Chengdu surging as much as 10%.

** The valuations of Chinese banks are now at historically low levels with sufficient safety margin and allocation value, analysts at Northeast Securities said in a report.

** China will extend the grace period for implementation of sweeping asset management rules to the end of 2021, the central bank said on Friday.

** The one-year extension will help ease the impact of the pandemic on financial institutions’ asset management businesses and help avoid the pressure on them caused by the centralised disposal of stock assets, the central bank said in a statement on its website.

** Tuesday’s gain followed a strong rally on Monday, underpinned by upbeat domestic factory data.

** Although market participants remained wary of uncertainties around Sino-U.S. relations.

** The uncertainties around Sino-U.S. relations are increasing and would persist until the 2020 U.S. election, which could weigh on the market, said Zhang Chengyu, vice general manager of vice general of Beijing-based Shiji Hongfan Asset Management Company.

** China will not accept the “theft” of a Chinese technology company and is able to respond to Washington’s move to push ByteDance to sell short-video app TikTok’s U.S. operations to Microsoft, the China Daily newspaper said on Tuesday.

** In Hong Kong, the Hang Seng index added 0.8%, to 24,659.93 points, while the Hong Kong China Enterprises Index gained 1.2%, to 10,157.03. (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Aditya Soni)

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