Update | Chinese and Hong Kong shares stabilise by midday after rate cuts by Beijing

Chinese and Hong Kong markets closed mostly higher by midsession Wednesday with Beijing’s latest rate cuts restoring a modicum of confidence after a week of savage losses.

The Shanghai Composite Index closed up 0.8 per cent at 2,988.76 after recovering from a 2 per cent off-the-bell fall. The Shenzhen Composite Index clawed back some of its morning losses to finish at 1,745.05, down 0.23 per cent. The CSI300 index of Shanghai-Shenzhen large cap stocks finished the morning at 3,094.03, up 1.68 per cent.

Hong Kong’s Hang Seng Index closed midday at 21,443.91, up 0.18 per cent. The China Enterprises Index (H-share index), which track Hong Kong listed Chinese companies, closed at 9,638.22, up by 1.31 per cent.

“While there was not a rebound in the market the interest rate cut and RRR cut managed to stop the free fall in the market experienced over the last few days,” wrote Gerry Alfonso, director of Shenwan Hongyuan Securities in Shanghai.

“(Chinese) blue chip companies are outperforming, particularly financial stocks. The banking sector is having a small rally as it is the clear winner of this new set of measures. IT Stocks are underperforming as investors are moving into value stocks rather than into growth names,” Alfonso wrote.

Wednesday’s trading will be a welcome respite for investors following a more than 20 per cent drop in mainland indices since August 18.

On Tuesday evening, China’s central bank, the People’s Bank of China, cut interest rates and bank reserve requirement ratios (RRR) after earlier market hopes for a weekend intervention came to naught.