January 21, 2019 / 4:40 AM / 3 months ago

China stocks edge higher, shake off tepid GDP growth

* SSEC +0.7 pct, CSI300 +0.7 pct; HSI +0.3 pct

* 2018 GDP growth at 6.6 pct, slowest since 1990

* Investors seek comfort in further govt stimulus

HONG KONG, Jan 21 (Reuters) - Shares in China and Hong Kong climbed on Monday despite the Chinese economy reporting its slowest annual expansion in 28 years, as investors bet on Beijing to spend more to prop up growth. ** At the midday break, the Shanghai Composite index was up 0.7 percent at 2,613.53 points. ** China’s blue-chip CSI300 index also gained 0.7 percent, with its financial sector sub-index higher by 0.4 percent, the consumer staples sector up 1.1 percent, and the healthcare sub-index up 0.8 percent. ** Chinese H-shares listed in Hong Kong rose 0.6 percent, while the Hang Seng Index advanced 0.3 percent at 27,181.91 points. ** The smaller Shenzhen index rose 0.8 percent and the start-up board ChiNext Composite index edged up 0.9 percent. ** China’s economic growth cooled slightly to 6.4 percent in the fourth quarter from a year earlier, weighed down by weak investment and faltering consumer confidence and the trade war with the U.S., leaving 2018 growth at 6.6 percent, the weakest since 1990. ** But the market stayed put because investors “already knew that the economy was slowing down, and we can expect more supportive policies,” said Larry Hu, an economist at Macquarie Capital in Hong Kong. ** However, pressure on share prices may come “in the next few months (when) we see data continue to worsen and corporate earnings will be revised down,” he added. ** Analysts polled by Reuters see GDP growth slowing to 6.3 percent before the impact of government stimulus kicks in. ** There will be more support for Chinese equities when China cuts taxes later this year, said Patrick Yiu, managing director at CASH Asset Management in Hong Kong, who is limiting his A-share exposure for now. ** “So far the money (from policy loosening) has gone to the banks, and not a lot of that has flown into the stock market. But with tax cuts, people will spend, and we will see the impact of that faster,” he said. ** Shares in Chinese consumer firms extend gains despite the soft GDP figures as investors expect more stimulus measure to spur the country’s consumption. ** China’s Finance Ministry on Friday announced further tax cuts for small companies as part of an effort to create jobs and promote economic stability. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.1 percent while Japan’s Nikkei index gained 0.3 percent. ** At 0409 GMT, the yuan was quoted at 6.7884 per U.S. dollar, 0.13 percent weaker than the previous close of 6.7795. ** The largest percentage gainers in the main Shanghai Composite index were Citic Guoan Wine Co Ltd, up 10.2 percent, followed by Shanghai Hongda Mining Co Ltd, gaining 10.1 percent and Anhui Quanchai Engine Co Ltd, up by 9.9 percent. ** As of midday, China’s A-shares were trading at a premium of 17.81 percent over the Hong Kong-listed H-shares.

Reporting by Noah Sin; Editing by Shreejay Sinha

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