HONG KONG: China and Hong Kong stocks rallied to multi-month highs on Friday, led by rare earth and tech gains, ahead of US-China talks at the ASEAN Summit and expectations of further policy support.
At the midday break, the Shanghai Composite index jumped 1.1% to 3,546.50 points, the highest level since October last year. The blue-chip CSI300 index also added 1.1%.
The rare earth sector led the rally with a surge of nearly 6% to its highest since early 2023, while the brokers shares jumped nearly 4%.
In Hong Kong, the benchmark Hang Seng Index was up 1.9% at 24,485.49, a 4-month high. The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index rose 1.8%.
Tech shares led gains in Hong Kong with the Hang Seng Tech Index adding more than 2%, while shares of Alibaba and Meituan both jumped more than 3%.
US Secretary of State Marco Rubio will meet Chinese Foreign Minister Wang Yi in Kuala Lumpur on Friday, the State Department said, in what will be the first in-person meeting of the two counterparts.
Friday’s gains pushed the Shanghai Composite Index up 2.1% for the week — its strongest performance since January.
“Sentiment improved with the government’s clearer message on anti-involution, aimed at reining-in the escalation of excess competition and potential overcapacity,” Morgan Stanley China strategist Laura Wang said in a note on Friday.
“We still expect near-term volatility to rise and range-bound index moves in the offshore market. We prefer A-shares over offshore for now.”
The real estate sector edged down 0.3%, paring Thursday’s rally.
Goldman Sachs noted that although consensus is low for fresh shantytown redevelopment, there still are trading opportunity in the sector as there might be new policy announcements into upcoming policy meetings.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.62%.
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