Chinese Stocks Erase Losses Amid Speculation of State Supportby
Shanghai Composite closes higher after falling as much as 1.2%
State-backed firms said to earmark funds supporting HK shares
Shanghai shares erased losses in the afternoon, with consumer and utilities stocks leading the rebound, amid speculation authorities intervened.
The Shanghai Composite Index rose 0.3 percent at the close after falling as much as 1.2 percent. China made preparations to support the Hong Kong stock market if needed before an expected July 1 visit by President Xi Jinping, according to people with direct knowledge of the matter who asked not to be named as the information isn’t public. Hong Kong’s benchmark Hang Seng Index gained 0.4 percent to close at the highest level since July 2015.
While the Shanghai Composite Index is close to an October low, the MSCI China Index -- composed almost entirely of Hong Kong and U.S. listings -- is holding on to this year’s 19 percent gain. Mainland markets have struggled under the government’s campaign to trim risk in the financial sector, with the Shanghai gauge falling 5 percent since the beginning of April.
"Other markets have been doing well overall, and A shares look so isolated," said Ronald Wan, chief executive officer at Partners Capital International Ltd. in Hong Kong. "It could be the China national team stepping in as valuations are low."
- Apple Inc. supplier AAC Technologies tumbled the most on Hong Kong’s benchmark gauge, sliding 10%, after short-seller Gotham City Research questioned the company’s profit margins. AAC Technologies said in a statement it “vigorously denies” the claim in the report. The stock was the top performer on the Hang Seng Index this year through Wednesday.
- Semiconductor Manufacturing International Corp. fell 2.8% in Hong Kong after the company changed its CEO and said revenue may fall.
- Huaneng Renewables Corp. slid 5% after announcing a plan to sell shares at a 7.4 percent discount to Wednesday’s close. The company aims to raise HK$2.19 billion ($281 million).