Chinese stocks settle for best month in 2 years on recovery hopes, easing COVID brakes


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SHANGHAI — Chinese stocks rebounded on Thursday, with major indexes set for their biggest monthly gain in nearly two years, supported by signs of economic recovery and the easing of COVID-19 restrictions, while Hong Kong was in large stable part. **At the midday break, the Shanghai Composite Index rose 1.3% to 3,405.64 points, while the blue-chip CSI300 index gained 1.62% to 4,492.2 points.

**Both indexes were set for their best months since July 2020, if gains hold. ** The financial sector sub-index rose 1.15%, the consumer staples sector climbed 2.23%, the real estate index edged up 0.84% ​​and the health jumped 3.19%.

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** In Hong Kong, the benchmark Hang Seng Index was broadly flat at midday, while Hong Kong-listed Chinese H-shares edged up 0.21% to 7,710.91 points.

**Shenzhen’s smaller index rose 1.76% and the start-up board’s ChiNext Composite Index jumped 2.1%.

**The gains across the board came as official data released earlier in the session showed China’s manufacturing and service sectors halted three months of declining activity in June, as authorities stepped up lifted a strict COVID lockdown in Shanghai, reviving production and consumer spending.

** “The worst may be over, but the recovery remains uneven, with industrial production outpacing domestic demand,” Citi analysts said in a note. But they pointed to uncertainties surrounding ongoing COVID-induced disruptions, weak sentiment and global recession risks.

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** China’s central bank must keep cuts in interest rates and the bank’s reserve requirement ratio among its policy options until the economy rebounds, said Guan Tao, a former senior official at the regulator country changes.

** Analysts said hopes for further stimulus, including monetary easing, continued to support markets. “At the start of the economic recovery, regardless of the pace of growth, monetary policy favors at least an easing bias,” said Zhang Jingjing, chief macroeconomic analyst at China Merchants Securities. ** The latest relaxation of coronavirus travel rules, combined with other encouraging political signals, has started to attract some foreign investors to Chinese stocks, increasing the chances that the market can maintain its rebound after months of heavy selling. .

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**Official data showed foreign investors bought 139.15 billion yuan ($20.79 billion) of Chinese stocks this month through the Stock Connect program, the most this year.

** The tourism and liquor sectors were among the biggest gainers as the easing of coronavirus restrictions boosted investor sentiment. An index that tracks tourism-related businesses jumped 4.37% midday, set to register the biggest weekly gain in nearly two years. ** CSI liquor, a gauge that measures the performance of spirits producers, rose 3.81% on Thursday. Wuliangye Yibin Co Ltd jumped 4.1% to 199.94 yuan, while Kweichow Moutai jumped 2.1% to 2,050.1 yuan in the lunch break.

($1 = 6.6946 Chinese Yuan)

(Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips)



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