HONG KONG: China stocks edged lower on Friday, pausing their recent rally, as investors locked in gains ahead of a key Politburo meeting, though the market remained on track for a fifth straight weekly gain.
At the midday break, the Shanghai Composite index fell 0.3% to 3,593.38, after logging the highest close since January 2022 on Thursday. China’s blue-chip CSI300 index lost 0.5%.
Liquor distiller, consumer staples and rare earth sectors led the declines, with losses ranging from 0.9% to 1.6%.
Despite the day’s pullback, the Shanghai Composite index has gained 1.7% so far this week and is set to rise for the fifth straight week – its longest winning streak since the rally that began in February 2024.
Beijing’s latest efforts to curb excessive competition and overcapacity, and incremental signs of improving U.S.-China trade relations lifted sentiment.
Analysts at CLSA said institutional investors’ overall risk appetite has improved significantly this month, though some remain unconvinced about a structural bull run and see more sector-specific opportunities.
Hong Kong’s benchmark Hang Seng Index weakened 1.1% to 25,383.07, after hitting its highest since November 2021 on Thursday.
The Hang Seng Tech Index led declines, losing 1.7% on the day.
Market attention would be squarely on the Politburo meeting next week, given that it will likely shape economic policy for the rest of the year.
Chinese policymakers, concerned about local growth amid an ongoing trade war with the U.S., are unlikely to offer a big gun stimulus this time until there’s more clarity on what’s needed, said Keiko Kondo, Schroders’ head of multi-assets for Asia, who’s neutral on China equities.
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