China, Hong Kong stocks buck regional sell-off as policy support gathers pace

Stock markets in mainland China and Hong Kong reversed earlier losses to close higher on Wednesday, shrugging off an overnight rout in US shares.

They bucked declines elsewhere in Asia that took their cues from a sell-off in the US, as traders re-assessed the strength of the world’s second-largest economy after a raft of measures to bolster growth.

The Shanghai Composite Index gained 0.2 per cent and Hong Kong’s Hang Seng Index added 0.5 per cent, as both benchmark gauges reversed intraday losses of at least 1 per cent.

Other major regional benchmarks all ended lower, with Japan’s Topix falling 0.6 per cent and Australia’s S&P/ASX 200 dropping 0.5 per cent, after US technology stocks tumbled into bear market territory overnight.

Chinese developers from Hong Kong-traded Country Garden Holdings and Shanghai-listed China Fortune Land Development surged on speculation measures to cool the housing market will be eased amid falling sales.

Unfazed by the recent rout in the US market, investors in the mainland and Hong Kong started buying more stocks after President Xi Jinping said support for China’s private companies was “unwavering” and financial regulators vowed to widen funding channels for smaller firms to defuse the risk linked to shares pledged as collateral for loans. The Shanghai Composite has risen 4 per cent over the past month, the second-best performer among the world’s major markets after Brasil.

“The expectations about China’s economic fundamentals have been improving after all these support measures and stock valuations are also pretty attractive,” said Chen Hao, a strategist at KGI Securities in Shanghai. “Hong Kong’s market is benefiting for the same reason and that’s why it’s moving in synchrony with the mainland’s market.”