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China stocks log best day in one month on economic recovery hopes

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SHANGHAI — China stocks saw their best day in one month on Thursday, as investor hopes for a strong economic recovery in 2023 dwarfed worries over a COVID spike, with authorities vowing to support growth.

** China’s blue-chip CSI 300 Index closed up 1.9%, and the Shanghai Composite Index rose 1%. Both indexes logged their best daily performance since Dec. 5.

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** Hong Kong’s Hang Seng Index gained 1.3%, and the Hang Seng China Enterprises Index rose 1.5%.

** Other Asian shares also advanced on investor hopes for China’s emergence from the pandemic, while the dollar stayed under pressure even as the U.S. Federal Reserve meeting minutes showed the Fed warning against market bets on interest rate cuts this year.

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** “China’s abrupt reopening from COVID restrictions has led to a public health mess … None of this will derail a robust economic recovery, aided by government policy that is now firmly focused on supporting growth,” Gavekal Dragonomics analysts said in a note.

** China’s central bank said on Wednesday it would keep liquidity reasonably ample, step up financing support to spur domestic consumption and key investment projects, and support a stable real estate market in 2023.

** Foreign investors had bought a net 12.75 billion yuan ($1.85 billion) of Chinese shares on Thursday, recording the biggest amount since Nov. 14.

** Chinese shares in consumer staples, healthcare and New energy rose between 2.8% and 3.3% to lead the gains.

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** Tech giants listed in Hong Kong surged as much as 3.9% before ending up 1.5%.

** The strong performance comes even as a private-sector survey showed China’s services activity shrank in December as surging COVID infections hit demand.

** However, the pace of recent declines slowed while business confidence rose to a 17-month high, the The Caixin/S&P survey showed.

** “A strengthening growth outlook should push the indexes higher. Sectors focused on domestic consumer demand should outperform more export-dependent tech hardware. The offshore components of MSCI China stand to benefit most, given attractive relative valuations and a more relaxed regulatory environment for internet platforms,” Gavekal analysts said. (Reporting by Shanghai Newsroom Editing by Vinay Dwivedi and Raissa Kasolowsky)

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