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China, HK stocks hold tight ranges as COVID fears cap growth hopes

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SHANGHAI — China and Hong Kong stocks swung in and out of positive territory on Friday as investors weighed the short-term impact of spiking infections, while awaiting government plans for growth in a post-COVID era.

The performance of Chinese tech stocks also diverged. Mainland-listed chipmakers fell after Washington added more Chinese names to its blacklist, while Hong Kong-traded technology giants rose as risks of Chinese firms being delisted on Wall Street eased.

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Both China’s CSI300 Index and the Shanghai Composite Index dipped 0.3% by the lunch break, having swung between negative and positive territories.

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Hong Kong’s Hang Seng Index rose 0.1% with Chinese developers listed in the city jumping 2.9%.

China put a priority on protecting rural communities from COVID-19 on Friday as millions of city-dwellers planned holidays for the first time in years after Beijing abandoned its stringent system of lockdowns and travel curbs.

Investors also await clues on policy direction from a closely watched economic policy meeting being held in Beijing.

“We believe there are ample opportunities in both onshore and offshore China equity markets, including consumer-related, healthcare, and internet companies that can benefit from domestic demand recovery and China’s potential reopening,” Mike Shiao, chief investment officer, Asia ex-Japan at Invesco wrote in his 2023 investment outlook.

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“Looking ahead, we expect regulators to target a reasonable growth rate of around 5%.”

Shanghai’s STAR Market, home of China’s biggest chipmakers, fell after the Biden administration on Thursday added Chinese memory chipmaker YMTC and 21 “major” mainland players in the artificial intelligence chip sector to a trade blacklist.

Shares in Cambricon Technologies Corp, for example, slumped although Hong Kong’s Hang Seng Tech Index erased early losses.

The U.S. accounting watchdog said it has full access to inspect and investigate firms in China for the first time, removing the risk that around 200 Chinese companies could be kicked off U.S. stock exchanges.

Hong Kong-listed shares of companies that are dual-listed in New York, including Trip.com and JD.com, rose. (Reporting by Shanghai newsroom; Editing by Sam Holmes)

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