China and HK stocks rise, but stimulus, US election uncertainty temper gains

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SHANGHAI, Oct 25 (Reuters) - China stocks rose on Friday and were also up for the week, though investors were reluctant to place big bets as they await details of Beijing's fiscal stimulus and next month's U.S. election results.

Hong Kong stocks also gained, but were on track for a third consecutive weekly loss, as late September euphoria dissipates.

China's blue-chip CSI300 Index .CSI300 and the Shanghai Composite Index .SSEC both edged up roughly 1%, and were up 1.2% and 1.4% respectively, for the week.

Hong Kong's Hang Seng Index .HSI rose 1.1%, but is so far down 0.4% for the week.

China and Hong Kong stocks surged last month after Beijing kicked off its biggest stimulus since the pandemic, but the heavy outflows this month appear to have put the brakes on that sweeping rally for now.

Global hedge funds have clawed back nearly 80% of the peak cumulative buying in Chinese equities as of Oct.23, Goldman Sach's prime brokers team estimates.

China stock market turnover, which hit record levels on Oct 8, has been shrinking since, suggesting growing caution from investors looking for direction, Founder Securities investor advisor Luo Xuhong said in a note to clients.

"The market is getting uneasy about fiscal stimulus", the details of which have not yet been announced, Luo said.

The Nov 5 U.S. election is also keeping investors on edge.

A win for Republican Donald Trump, particularly if accompanied by a Republican sweep of Congress, is expected to squeeze the yuan and shares in the export sector.

A victory for Democrat Kamala Harris is likely to result in opposite trades.

"In Trump wins, the U.S. is expected to levy fresh tariff on Chinese goods," Haitong Securities said in a report.

China's small-caps outperformed blue-chips on Friday, with the CSI 2000 Index .CSI932000 jumping 2.3%, compared with a gain of 0.9% in the CSI Meg-cap Index .CSI000980.

Winners include photovolaic .CSI931151, media .CSI399810 and electronics stocks .CSI399811, while losers include utilities .CSI000917, banking .CSI399986 and telecom services shares .CSI932140.

In Hong Kong, most sectors rose, with industrials .HSCIIG, biotech .HSHKBIO and information technology shares .HSIT led the gains.

(Reporting by Shanghai Newsroom; Editing by Muralikumar Anantharaman and Shri Navaratnam)

((samuel.shen@tr.com))