China shares rise as yuan loan growth expectations fuel recovery hopes

SHARES in China and Hong Kong added to their gains on Thursday (Feb 9) as investors remained upbeat on China’s economic recovery, after a poll showed that new yuan loans extended by Chinese banks likely surged to a record high in January.

China’s blue-chip CSI 300 Index rose 1.34 per cent, while the Shanghai Composite Index climbed 1.18 per cent.

Hang Seng Index rose 1.6 per cent and Hang Seng China Enterprises Index added 1.73 per cent.

Asian shares tracked Wall Street lower on Thursday, as a number of Federal Reserve speakers echoed chair Jerome Powell in saying that interest rates are set to go higher.

Yuan loans extended by Chinese banks are expected to have surged to a record high in January as the central bank moved to shore up growth in the world’s second-biggest economy following a lifting of pandemic controls, a Reuters poll showed.

Loans, and money supply data are due from Feb 10 to 15.

The CSI Liquor index gained 3.13 per cent after Bloomberg reported on Wednesday that Chinese white liquor maker Guizhou Guotai Liquor was seeking to raise US$500 million in a Hong Kong IPO.

Liquor maker Wuliangyi Yibin jumped 3.93 per cent in Shenzhen, while Kweichow Maotai added 1.91 per cent in Shanghai.

A recovery in consumption-led activity will take shape from the first quarter onwards, according to a report from UBP, which revised its GDP 2023 forecast to 6 per cent from 5.2 per cent previously.

Meanwhile, net inflow into the A-share market via the northbound stock connect returned on Thursday.

Foreign investors bought a net 12.1 billion yuan (S$2.4 billion) worth of China stocks after four days of net selling. In January, northbound net inflow totalled 141.3 billion yuan, the biggest monthly flow on record.

“We expect to see some more net inflows of long-term foreign capital into the A-share market as more evidence of economic recovery surfaces,” Lei Meng, UBS Securities’ China equities strategist, said in a note.

Northbound net inflow could top 300 billion yuan this year, Lei Meng added.

Xiaomi’s 8.51 per cent jump led the gains in the Hang Seng Index.

But capping the upside was Baidu, whose Hong Kong shares fell more than 3 per cent for the second day in a row after a 15 per cent surge on Tuesday on news about the company’s ChatGPT-like AI chatbot called Ernie Bot.

China’s state media The Securities Times ran a front-page editorial Tuesday warning of the risks in speculating on stocks riding on the recent ChatGPT hype. REUTERS