China Stocks Jump With High Volume, Bucking Global Market Rout

  • CSI 300 rises as much as 3%, extending gains amid global rout

  • China data beat estimates; PBOC keeps key interest rate steady

Chinese stocks rallied to their highest in three months, extending a recent outperformance over global peers, as the country’s growth-focused policy lures investors seeking a reprieve from global market meltdown.

The benchmark CSI 300 Index extended its advance to 3% Wednesday afternoon, taking its gains in June to more than 5% amid a global sea of red. The S&P 500 Index earlier plunged into a bear market as did a key MSCI Inc. index of world equities, with traders pricing in a 75-basis-points rate hike by the Federal Reserve later today.

Bets that China’s policy support will help revive the Covid-hit economy got a boost Wednesday from better-than-expected May data on industrial output and retail sales. Having been hammered during weeks-long lockdowns in key cities, Chinese equities have shown extraordinary resilience during the latest global selloff, helped also by Beijing’s dialing back of a crackdown on the key technology sector.

Chinese stocks were the best performers in Asia early Wednesday. The gains came even as the People’s Bank of China kept a key policy rate unchanged. The rate on the central bank’s one-year medium-term lending facility was left at 2.85%. A small number of polled analysts had expected a reduction of either five or 10 basis points.

China’s consumer prices rose a mere 2.1% in May from a year earlier, a fraction of the pace in the US at 8.6%. That’s seen as giving Chinese authorities the room to further loosen monetary and fiscal policy settings as necessary.

In a sign that sentiment is on the mend, the turnover for stocks on the mainland has topped 1 trillion yuan ($149 billion) in six out of the past seven sessions, with the figure already approaching 800 billion yuan as of the mid-day break on Wednesday.

In Hong Kong, the benchmark Hang Seng Index rose as much as 1.7%. The Hang Seng gauge of tech shares advanced more than 3.2%.

As China stocks continue their climb out of a mid-March trough, the list of strategists and money managers turning bullish, or reiterating optimism on the market, has only been growing. Foreigners have snapped up more than 8 billion yuan of mainland shares through Wednesday morning, poised to extend their buying streak that’s continued in all but one day this month.

A key factor still weighing on stocks is Beijing’s adherence to Covid Zero. Small scale movement controls are frequent even as a blanket lockdown across Shanghai has been lifted, and the specter of restrictions returning with just a handful of infection cases may put a cap on the rally.


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