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An investor looks at a stock quotation board at a brokerage office in Beijing. Photo: Reuters
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China stocks climb to three-month high on for outlook for policy support, easier regulations on private companies

  • Utilities and raw-material producers led onshore stock winners as China pledges to stabilise growth in 2022, front-load policy support
  • Excessive capital growth may instead be curbed with other forms of mechanism, economic work conference concluded
Stocks
Cheryl Heng
Zhang Shidong
Cheryl Hengin Hong KongandZhang Shidongin Shanghai
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China’s onshore stocks advanced to the highest in three months after top leaders pledged to front-load policy support to stabilise growth next year and hinted at easing regulations on private companies.

The Shanghai Composite Index gained 0.4 per cent to 3,681.08 at the close of Monday trading, the highest level since September 13. The CSI 300 Index of biggest companies in Shanghai and Shenzhen added 0.6 per cent. Utilities and raw-material producers led winners.

The Hang Seng Index slipped 0.2 per cent in Hong Kong, reversing an intra-day gain of as much as 1.6 per cent. Sunny Optical was the worst performer on the benchmark with a 3.2 per cent decline. Alibaba Group Holding ended with a 0.1 per cent loss, surrendering a 4.6 per cent rally.

China’s top policymakers concluded its Central Economic Work Conference on Friday by pledging to keep economic growth within a reasonable range and maintain social stability, the state-run Xinhua News Agency reported, citing an official post-event statement.
Foreign traders have loaded up onshore stocks for nine consecutive days through Monday, topping up their net purchases by 69.4 billion yuan (US$10.9 billion) through the Stock Connect link. A government report last week showed producer price index cooled last month from a 26-year high.
Companies that cater to the mass-market consumers, such as apparel makers, restaurant operators, and appliances and furniture manufacturers, will probably outperform next year, as consumer spending revives, according to China International Capital Corp. Citic Securities is bullish on property developers and building-material producers on bets a liquidity crunch will ease.

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“Sentiment is gradually turning towards Chinese stocks, with foreign flows being positive, said Thomas Poullaouec, head of Asia-Pacific multi-asset solutions at T. Rowe Price, said in a note to clients. “Inflationary pressures are far more subdued than in the Western world; this gives room for the policymakers to ease from here.”

Beijing also hinted it would go easier on regulating big private sector players after a heavy-handed crackdown this year jolted domestic markets and erased trillion dollars of market value. Excessive capital growth may instead be curbed through other mechanism, it added.

Policy easing bets helped lift the Hang Seng Index from a 14-month low last week, adding back US$260 billion of market value.

Elsewhere, Yonghe Medical Group, which provides hair-related health care services, climbed 5.1 per cent from the initial public offering price to HK$16.60 on the first day of trading in Hong Kong.

Major Asian markets were mixed on Monday as investors keep their eye on a handful of central bank policy meetings this week. Stocks in Japan and Australia advanced 0.7 per cent and 0.4 per cent respectively, while those in South Korea dropped 0.3 per cent.

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