China stocks soar as Beijing vows support amid market rout

HONG KONG • Stocks across Hong Kong and China staged a stunning rebound yesterday after the mainland's State Council vowed to keep its stock market stable amid a historic rout that erased US$1.5 trillion (S$2 trillion) in value over the past two sessions.

The Hang Seng China Enterprises Index, which tracks mainland companies listed in Hong Kong, jumped 13 per cent, its biggest gain since the global financial crisis. The Hang Seng Index closed up 9 per cent.

A gauge of Chinese tech firms soared by a record 20 per cent, with Alibaba Group Holding and Tencent Holdings gaining more than 23 per cent. Reuters, citing sources, yesterday reported that the tech giants were preparing to cut tens of thousands of jobs combined this year.

The strong rally in share prices followed a report by the official Xinhua news agency that China will keep the stock market stable and support overseas share listings, citing a meeting chaired by Vice-Premier Liu He.

The comprehensive statement also sought to resolve other woes that have plagued the market, particularly concerns over Beijing's tech crackdown, saying efforts to "rectify" Internet platform companies should end soon.

China's central bank and its banking and insurance regulator followed suit in pledging their role to ensure a stable capital market, a coordinated move that underscores the authorities' determination.

The statement also called for new policies to handle property developers' risks, as well as a mention that regulators in both countries have achieved positive progress on the issue of Chinese stocks listed in United States markets.

Equities in the region have seen intense selling recently amid regulatory fears and speculation that Beijing's ties with Moscow may lead to political backlash.

Cheap valuations had lured some dip buyers, but lingering risks including a possible US delisting of Chinese stocks, weak home prices and a coronavirus lockdown in tech hub Shenzhen had been weighing on sentiment.

China's benchmark CSI 300 Index closed 4.3 per cent higher, the most since July 2020. Prior to yesterday's session, the index was down more than 19 per cent this year, one of the worst performing national benchmarks globally.

Even with the latest bounce, however, some market watchers say it is too early to call an end to the rout, maintaining a wait-and-see stance to see if the verbal promises materialise into concrete policies.

JPMorgan Chase & Co earlier this week labelled some Chinese Internet names as "uninvestable" in the short term.

"Compared with the pessimism in previous days, everyone is now rushing to buy shares at low levels," said Core Pacific Yamaichi head of research Castor Pang. "The market was indeed oversold, irrational in this dramatic rout, and real money is back doing bottom fishing." BLOOMBERG