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China shares rose on Thursday morning on hopes of policy support and as US Federal Reserve Chairman Jerome Powell made comments interpreted as a dovish shift, but investors remain wary ahead of the upcoming G20 meeting in Argentina.
At the midday break, the Shanghai Composite index was up 7.26 points, or 0.28 per cent, at 2,608.99. China's blue-chip CSI300 index was up 0.31 per cent, with its financial sector sub-index higher by 0.02 percent, consumer staples sector up 0.7 per cent, real estate index down 0.77 per cent and healthcare sub-index up 0.99 per cent.
“Although the A-share market is showing strength, we should in no way view this as meaning that the short-term correction in prices is over,” analysts at China Fortune Securities said in a note, highlighting the importance of a planned meeting this weekend between Chinese President Xi Jinping and US President Donald Trump in Argentina.
The analysts said the ongoing uncertainty in Sino-US trade relations will mean the market will be mainly led by changes in risk appetite in the near future. “Typically in markets led by risk appetite, good or bad information can easily spark severe volatility,” they said.
US Federal Reserve Chair Jerome Powell had said on Wednesday the central bank's policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy US economy - comments that many investors read as signalling the Fed's three-year tightening cycle is drawing to a close.
Chinese H-shares listed in Hong Kong rose 0.18 per cent to 10,653.47, but the Hang Seng Index edged down 0.13 per cent at 26,646.76 after gaining 1.3 per cent a day earlier. The smaller Shenzhen index was up 0.17 per cent and the start-up board ChiNext Composite index was higher by 0.47 per cent.
Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.85 per cent, while Japan's Nikkei index was up 0.62 per cent. The yuan was quoted at 6.9424 per US dollar, 0.17 per cent firmer than the previous close of 6.954 as Powell's comments prompted dollar’s weakness.
The largest percentage gainers in the main Shanghai Composite index were Suzhou Kelida Building & Decoration Co Ltd, up 10.05 per cent, followed by Shanghai Kindly Enterprise Development Group Co Ltd, gaining 10.05 per cent and Shaanxi Broadcast & TV Network Intermediary Group Co Ltd, up by 10.05 per cent.
The biggest percentage losers in the Shanghai index were Shanghai Xinhua Media Co Ltd, down 8.33 per cent, followed by Shanghai DaZhong Public Utilities Group Co Ltd, losing 4.86 per cent and Ginwa Enterprise Group Inc, down by 4.64 per cent. So far this year, the Shanghai stock index is down 21.33 per cent, while China's H-share index is down 9.2 per cent.
Shanghai stocks have declined 0.04 per cent this month. The top gainers among H-shares were GF Securities Co Ltd, up 3.63 per cent, followed by Guangzhou Automobile Group Co Ltd, gaining 2.71 per cent and Byd Co Ltd, up by 2.3 per cent.
The three biggest H-shares percentage decliners were CSPC Pharmaceutical Group Ltd, which has fallen 1.59 per cent, China Petroleum & Chemical Corp, which has lost 1.1 per cent and China Railway Group Ltd, down by 0.8 per cent.
In Hong Kong, the sub-index of the Hang Seng index tracking energy shares dipped 0.2 per cent, while the IT sector fell 0.3 per cent. The top gainer on the Hang Seng was Henderson Land Development Co Ltd, up 2.29 per cent, while the biggest loser was Galaxy Entertainment Group Ltd , which was down 2.18 per cent.
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