Chinese stocks close higher on hopes for government support for small and new-economy firms

China’s index of growth companies led the country’s stock markets higher on Friday as investors took heart from recent government indications of support for smaller, entrepreneurial companies, while in Hong Kong shares rose on a report of a possible takeover move by a leading beer company.

The ChiNext gauge of start-ups surged 3.5 per cent to 1,856.46, closing above its 200-day moving average for the first time in six weeks, buoyed by comments at the ongoing National People’s Congress annual meeting expressing desire to promote hi-tech industries through measures including revised listing rules and faster equity financing.

“There is a lot of talk about the policy support of small and new-economy companies so investors are increasing their holdings of the sector now,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Investors are buying the smaller and pulling out of the blue-chip large companies that already have fair valuation after the decent gains.”

Sentiment was also helped after regulators approved late on Thursday an initial public share offer by Foxconn Industrial Internet, an assembler of iPhones, in only 36 days, against an average of about two years for recent offers.

Among the biggest gainers on the ChiNext, Wangsu Science & Technology, a maker of equipment to accelerate internet access speeds, jumped by the 10 per cent daily limit to 13.68 yuan. East Money Information, an operator of a financial website, rose 8.6 per cent to 14.99 yuan.

Elsewhere, online games live streaming companies pulled higher after internet giant Tencent Holdings invested in two rival live streaming sites – Douyu and Huya – fuelling expectations the country’s live streaming boom has yet to reach its zenith.

Hangzhou Liaison Interactive Information Technology, which owns live streaming platform Banli, surged 10 per cent to 7.44 yuan, while Shanghai U9 Game, which provides games live streaming service, also gained 10 per cent to 7.36 yuan.

The Shanghai Composite Index rose 0.6 per cent, or 18.76 points, to 3,307.17 at the close.

Steelmakers fell sharply after US President Donald Trump approved the imposition of a 25 per cent tariff on imported steel, while official data on Friday showed growth in China’s factory-gate prices weakened to the slowest pace in 14 months.

Hunan Valin Steel slid 9.4 per cent to 9.04 yuan. Baoshan Iron and Steel lost 3 per cent to 9.10 yuan and Chongqing Iron and Steel gave up 3.5 per cent to 2.49 yuan.

In Hong Kong, the Hang Seng Index gained 1.1 per cent, or 341.69 points, to 30,996.21. The Hang Seng China Enterprises Index, known as the H-shares gauge, added 0.8 per cent.

China Resources Beer jumped 9.9 per cent to HK$33.90 after a report from Reuters said the brewer was in talks with Heineken to buy the Dutch firm’s distribution operations and brands in China for more than US$1 billion. China is now the world’s largest beer market.

Bank of America Merrill Lynch raised its price target for China Resources Beer to HK$37, saying the takeover, if it went ahead, would boost the brand’s status.

Rival Tsingtao Brewery, China’s second-largest beer maker, rose 1.9 per cent to HK$42.45.

MTR Corp, the operator of Hong Kong’s commuter railway system, surged 4.2 per cent to HK$42.70 after reporting that its net income increased 64 per cent from a year earlier in 2017.

Country Garden Holdings climbed 2.2 per cent to HK$14.90 after the Chinese real estate developer reported a 42 per cent increase in its contract sales for the first two months of this year.