Stocks gain on China stimulus bets while AI firms slip amid regulatory risk and weak TSMC report slams SMIC and chip makers

Gains built on China stimulus bets faded amid a sell-off in Baidu and other AI-related stocks on valuation concerns

Hedge funds have switched out of onshore stocks over the past two months in favour of Chinese stocks listed in Hong Kong and New York: Goldman report

Reading Time:2 minutes

People walk past an electronic screen outside the Exchange Square in Central, Hong Kong on March 10. Photo: AP

Published: 10:37am, 11 Apr 2023Updated: 5:01pm, 11 Apr 2023

Hong Kong stocks advanced after an official report showed inflation in mainland China cooled more than expected last month, fuelling bets the government will step up stimulus measures to strengthen the economy while exports waned. Gains eroded as Badiu and AI-related stocks slumped.

The Hang Seng Index added 0.8 per cent to 20,485.24 at the closing of Tuesday trading, the most since March 29. The Tech Index erased losses to log a 0.3 per cent gain, while the Shanghai Composite Index declined 0.1 per cent.

Alibaba Group rose 1.6 per cent to HK$99.30 and HSBC advanced 1.1 per cent to HK$54.80 while WuXi Biologics surged 5.6 per cent to HK$50. Developer Longfor Group rallied 7.5 per cent to HK$23 and peer Country Garden surged 14.1 per cent to HK$2.34.

An official report showed consumer prices in mainland China rose in March by the smallest in 18 months, fuelling stimulus bets. Inflation slowed to 0.7 per cent from a year earlier, versus 1 per cent in February, the statistics bureau said. Economists tracked by Bloomberg had forecast a 1 per cent gain.

The softer inflation data “suggest post-Covid recovery momentum remains weak, to the disappointment of markets,” Nomura analysts including Ting Lu said in a note to clients on Tuesday. “We expect Beijing to step up policy support in the coming months.”

Separately, producer prices fell 2.5 per cent following a 1.4 per cent drop in February, the statistics bureau added, deepening a deflationary trend over six months.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x