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China stocks had mixed performance on Friday morning, as small-caps tumbled on supply fears but banking shares jumped, fuelling speculation that government-backed investors helped stabilise the market ahead of a key meeting by China’s parliament.
Hong Kong stocks were firm, aided by energy and resource shares, as global markets strengthened on the back of continued recovery in oil and commodity prices.
CSI 300 index
The blue-chip CSI300 index rose 0.4 per cent, to 3,070.85 points by lunch break, while the Shanghai Composite Index lost 0.5 per cent, to 2,845.87 points.
But the Shenzhen market, home to China’s smaller listed companies, tanked 2.6 per cent, reflecting a broader sell-off in small-caps.
Hong Kong market
The Hong Kong market tracked gains in regional markets. The Hang Seng index added 0.6 per cent, to 20,063.53 points, while the Hong Kong China Enterprises Index climbed 1.4 per cent, to 8,506.39.
Investors will closely monitor policy cues from the annual meeting of China’s National People's Congress (NPC), which starts on Saturday and will last around 12 days.
Expectations of fresh government stimulus are high as a raft of China data in coming weeks is expected to point to a further loss of momentum in the economy.
“We expect fiscal stimulus to be more aggressive on pro-growth sectors,’’ Alicia Garcia Herrero, economist at French bank Natixis, said in a report.
On Friday, Shenzhen’s start-up board ChiNext collapsed 4.6 per cent after a senior Shanghai Stock Exchange official told media in Beijing that preparation for the roll-out of an emerging industry board, the Shanghai counterpart of ChiNext, is proceeding smoothly.
A rival in Shanghai has raised fears of a potential surge in the supply of small-caps in the market, knocking ChiNext shares. But any impact on benchmark indexes was limited by a 2.6 per cent jump in the banking sector.
In Hong Kong, energy and resources shares led the benchmark index higher.
Investors shrugged off news that Hong Kong retail sales, which suffered their worst decline in 13 years last year, saw weak sentiment extending into January on slumping tourist arrivals, tepid local consumption and a strong local currency.
($1 = 6.5155 Chinese yuan)
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