©Reuters
Investing.com — China's benchmark stock index jumped on Tuesday after a major sovereign wealth fund said it would increase its holdings in local stocks, raising hopes for more government support for the battered local market.
The blue-chip index rose 1.8%; the index rose 0.8%. Both indexes have further recovered from their five- and four-year lows hit last week, with all sectors in positive territory.
The Hong Kong index rose 2.3% as mainland stocks rose, moving it further away from its lowest point in more than a year.
The recovery in the Chinese market was mainly driven by sovereign wealth fund Central Huijin Investment Limited's announcement that it would continue to increase its holdings in domestic exchange-traded funds.
Central Huijin is a Chinese state-owned investment company that holds shares in major Chinese state-owned enterprises. The company is a division of China Investment Corporation, and the announcement signals increased government support for the local market.
Immediately after Central Huizin's announcement, the China Securities Regulatory Commission also directed more domestic funds and asset management companies to buy into the domestic market, and also directed Chinese companies to buy back more shares. Then he announced.
The move helped halt a long slide in Chinese stocks, which had been Asia's worst performer through 2023, but has seen little easing so far in 2024.
Recent media reports have revealed that China is tightening regulations on stock market volatility, and recently instructed major fund managers to prevent their clients from shorting domestic stocks.
But it remains to be seen whether the measures can spur a sustained recovery in Chinese stocks, given recent economic data showing little improvement in the world's second-largest economy.
Concerns about China's slowing economic growth were the biggest factor in the decline in domestic stocks, largely offsetting the Chinese government's monetary stimulus.
The government also remained largely conservative in rolling out fiscal support to the economy, despite repeated calls from investors for more action.
Tuesday's move came after a series of weak results in the Purchasing Managers' Index for January, with little improvement in business activity. The statistics paint a gloomy picture ahead of a major announcement expected later this week.
