SHANGHAI – Shares of China and Hong Kong fell on Wednesday after a recent recovery, as investors feared the policies announced by Beijing would be insufficient to revive the coronavirus-ravaged economy.
** China’s bluechip index CSI300, which was up more than 6% from an April 27 low, fell 0.6% by midday. The Shanghai Composite Index lost 0.4%. In Hong Kong, the Hang Seng index fell 0.6%.
** The market rebounded after signs that China was rolling out more stimulus to help an economy ravaged by the country’s largest Covid-19 outbreak in two years.
** Chinese Vice Premier Liu He calmed the nerves of the tech sector on Tuesday by saying the government supported industry development and public listings for tech companies.
** The Hang Seng Tech Index, which was up about 14% in the past week in anticipation of the meeting, fell 1.7% on profit-taking due to the lack of detailed support measures.
** Real estate stocks, which also recovered on signs of policy easing, also fell on dismal April data.
** “House prices fell in more cities in April. The industry is going through a crisis,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
** “Government policies have become more supportive, but not overwhelming so… It is not clear when the housing sector will recover.”
** In its semi-annual outlook, Morgan Stanley said it expects China’s growth to fall below its 5.2% target by 2022, with the drag on the COVID zero strategy “only partially offset by broad easing” , as signaled in the Politburo Assembly.
** Sentiment declined further after data showed that foreign investors reduced their holdings of Chinese yuan-denominated bonds for the third straight month in April, the longest period on record.
** The Chinese STAR50 index, home to Chinese chipmakers and high-end manufacturing companies, rose 0.4%. (Reporting by Shanghai Newsroom; editing by Rashmi Aich)
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