China stocks recover amid investor confidence after recent declines

China stocks witnessed a rebound on Thursday, with Hong Kong shares notably surging following a seven-session losing streak since 2024. Investors seized the opportunity to buy the dip, contributing to the recovery in the midst of a cautious mood surrounding China's economic revival.

The blue-chip CSI 300 Index saw a gain of 0.3 per cent, and the Shanghai Composite Index edged up by 0.1 per cent. Meanwhile, Hong Kong's Hang Seng Index and the Hang Seng China Enterprises Index both recorded substantial jumps of 1.5 per cent.

Across Asia, stock markets exhibited positive momentum, setting the stage for gains ahead of crucial US inflation data. Investors keenly anticipate this data, considering its potential impact on the Federal Reserve's stance on interest rate adjustments. Additionally, the crypto market received a boost after the approval of exchange-traded funds (ETFs) to track bitcoin in the United States.

Foreign investors demonstrated confidence in the Chinese market by purchasing approximately 1 billion yuan of Chinese shares via the Stock Connect on the day.

Despite the recent uptick, investor sentiment remains cautious due to a lack of compelling evidence indicating a robust recovery in China's economy. Market participants are eagerly awaiting upcoming trade, inflation, and credit data, which are expected to provide insights into the strength of the economic rebound.

There is also speculation among investors that China's central bank might implement policy rate cuts as early as this month, further influencing market dynamics.

In terms of sector performance, shares in artificial intelligence and defense security rose by approximately 1.4 per cent, while companies in the anime, comic, and gaming sectors climbed by 2.4 per cent.

In Hong Kong, tech giants witnessed a notable surge of 1.8 per cent, with food-delivery giant Meituan experiencing a substantial gain of 3.8 per cent.

The positive sentiment extended to digital assets and crypto-related stocks, as evidenced by an 11.3 per cent jump in shares of BC Technology Group Ltd. This surge followed the approval of the first US-listed ETFs to track bitcoin by the Securities and Exchange Commission. The global cryptocurrency market's upward trajectory contributed to the positive performance of relevant stocks.

(With Reuters inputs)