November 19, 2019 / 4:52 AM / 7 months ago

China stocks rise on easing hopes; HK up amid strong demand for Alibaba

SHANGHAI, Nov 19 (Reuters) - China stocks rose on Tuesday as the central bank’s cut in lending rate bolstered hopes that Beijing will unveil more stimulus measures to counter a further economic slowdown.

** Hong Kong stocks also rose, encouraged by news that Alibaba’s $13.4 billion listing drew strong investor demand.

** The CSI300 index rose 0.6%, to 3,932.39 points at the end of the morning session, while the Shanghai Composite Index gained 0.5%, to 2,922.61 points. ** The Hang Seng index added 0.9%, to 26,921.44 points, while the Hong Kong China Enterprises Index gained 0.8%, to 10,636.41.

** China’s central bank unexpectedly trimmed a closely watched lending rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth. The seven-day reverse repurchase rate was cut to 2.50% from 2.55%.

** Ting Lu, Chief China Economist at Nomura International said he expects a couple of small, five-basis-point cuts in money market funding rates before mid-2020.

** “It’s now very evident that Beijing has been stepping up efforts to stabilize growth as top leaders are increasingly concerned about the downward pressure on growth,” Lu wrote.” I believe Beijing is to plan a bigger fiscal deficit and bigger amount of special bonds in 2020. Beijing might especially wish to boost infrastructure investment growth.”

** Meanwhile, investors are awaiting clearer news on the progress of U.S.-China trade negotiations. Overnight, CNBC had reported the mood in Beijing was pessimistic about the prospects of sealing an agreement. On the other hand, a new extension allowing U.S. companies to keep doing business with Chinese telecoms giant Huawei suggested something of an olive branch.

** In Hong Kong, investors feel encouraged that Alibaba’s mega listing is not affected much by the deepening political crisis in the Asian financial hub. Alibaba will stop taking orders from prospective institutional investors for its $13.4 billion secondary listing in Hong Kong earlier than expected after attracting strong demand, two people with direct knowledge of the matter said.

** China’s CSI300 financial sector sub-index was higher by 0.14%, the consumer staples sector up 0.63%, the real estate index up 1.25% and the healthcare sub-index up 1.39%. ** Chinese H-shares listed in Hong Kong rose 0.77% at 10,637.7, while the Hang Seng Index was up 0.85% at 26,907.19. ** The smaller Shenzhen index was up 1.28% and the start-up board ChiNext Composite index was higher by 2.21%. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.09% while Japan’s Nikkei index was down 0.40%. ** The yuan was quoted at 7.0267 per U.S. dollar, 0.02% weaker than the previous close of 7.0255. ** The largest percentage gainers in the main Shanghai Composite index were Jiangsu Zongyi Co Ltd, up 10.08%, followed by Jiangsu Lugang Culture Co Ltd, gaining 10.07% and Panda Financial Holding Corp Ltd, up by 10.05%. ** The largest percentage losses in the Shanghai index were Zhejiang Shengda Bio-Pharm Co Ltd, down 7.44%, followed by Ribo Fashion Group Co Ltd, losing 4.52% and UE Furniture Co Ltd, down by 4.16%. (Reporting by Samuel Shen and John Ruwitch; Editing by Shailesh Kuber)

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