China, Hong Kong stocks gain as Beijing signals economic rebalancing

HONG KONG: China and Hong Kong stocks rose on Thursday after Beijing slightly lowered its annual economic growth target, signalling a shift towards economic rebalancing, while optimism for progress in the Iran conflict helped lift risk appetite.

As of midday trading break, China’s blue-chip CSI300 Index gained 1.3% to rebound from a more than two-month low struck in the previous session, while the Shanghai Composite Index added 0.8%.

In Hong Kong, the benchmark Hang Seng Index climbed as much as 1.9%, rebounding from a six-month low.

China’s yuan also strengthened, bouncing from a one-month low on Thursday, after the central bank set its daily midpoint guidance at its strongest in nearly three years, a move aimed at stabilising markets amid heightened tensions in the Middle East.

The yuan was roughly 0.1% higher at 6.8897 to the dollar by 0335 GMT.

Beijing announced an economic growth target for 2026 of 4.5%-5%, a slight downgrade from the 5% pace achieved last year, leaving room for bigger policy measures to reduce industrial overcapacity and rebalance the economy.

The country’s 15th five-year plan also pledged more effort to achieve greater technological self-reliance and targeted growth in nascent domestic industries, including semiconductors, aerospace and artificial intelligence.

The CSI Artificial Intelligence Index and CSI Semiconductor Industry Index climbed 3.3% and 2.6%, respectively, leading sectors in the overall market.

“It appears policymakers intend to maintain a broadly supportive policy stance consistent with the approach taken since 2025 … with an emphasis on supporting ‘new economy’ sectors, particularly AI and related industries,” said Marco Sun, chief financial market analyst at MUFG (China) in Shanghai.

Meanwhile, a recovery in risk appetite that was hammered by the escalating war in the Middle East has also supported gains, following a New York Times report on Wednesday suggesting Iran had signalled a willingness to engage in talks with the US to seek an end to the war.

“Today’s China market rise is inspired by an overnight rebound in US stocks,” said Yuan Yuwei, fund manager at Trinity Synergy Investments in Hong Kong.

“China’s ‘National Team’ investors may also be tasked with steadying the market around the NPC meeting.”