SHANGHAI, March 3 (Reuters) - China and Hong Kong stocks rose sharply on Wednesday morning, led by banking and commodity stocks, as economic growth optimism trumps monetary tightening fears ahead of a key political conference in Beijing.
** The blue-chip CSI300 index climbed 1.2% to 5,415.31 by the end of the morning session, while the Shanghai Composite Index gained 1.3% to 3,555.28.
** In Hong Kong, the Hang Seng index rose 1.7% to 29,587.74. The Hong Kong China Enterprises Index gained 1.6% to 11,542.99.
** China's top banking watchdog said on Tuesday regulators were studying effective measures to reduce the risk of foreign capital inflows. The remark is interpreted by some as pointing to Beijing's little willingness to lift interest rates, a move that could invite more inflows.
** Luca Paolini, chief strategist, Pictet Asset Management, said inflation worries were overblown. "The economic recovery that will gather strength over the course of 2021 shouldn't lead to a rapid pickup in inflation," he wrote, adding: "stocks have the potential to extend gains in the coming months."
** Some traders also attributed the market strength to bullishness ahead of the annual gathering of the National People's Congress. The meeting starts on Friday.
** Cyclical stocks rose sharply in both China and Hong Kong, reflecting investor optimism toward economic growth.
** Banking shares jumped nearly 4% in China, and were up over 2% in Hong Kong. China-listed steelmakers surged 5.5%.
** Investors were also dissecting the impact of the Hang Seng Index's planned restructuring, which will see the number of its constituents increase to 88 by mid-2022 from 55 at present. The number will eventually rise to 100.
** The financial sector's index weight would see the biggest drop, to 32.8% from 41.9%, while consumer discretionary stocks would have the biggest lift, to 22.4% from 15.8%, according to Morgan Stanley estimates.
Comments