November 12, 2018 / 5:07 AM / 6 months ago

China, HK stocks edge higher as govt ramps up support for private sector

* SSEC, CSI300 indexes gain 0.7 pct

* HSI up 0.3 pct ahead of Tencent earnings

* Govt relaxes rules on share buybacks, planning tax cuts

By Noah Sin

HONG KONG, Nov 12 (Reuters) - Stocks in China and Hong Kong edged higher on Monday after government departments and regulators rolled out a series of measures over the weekend to support the private sector, including steps to make share buybacks easier.

** The Shanghai Composite index rose 0.7 percent to 2,616.29. The blue-chip CSI300 index was also up 0.7 percent.

** CSI 300’s financial sector sub-index climbed 0.4 percent, the consumer staples sector was down almost 1 percent, the real estate index gained 1.1 percent and the healthcare sub-index was up 0.7 percent.

** The smaller Shenzhen index was up 1.6 percent and the start-up board ChiNext Composite index jumped 2.4 percent.

** Investors were encouraged after the government ramped up its support for private enterprises over the weekend, rolling out a series of measures, including a simplified process for listed companies to buy back shares, announced by the China Securities Regulatory Commission on Friday.

** China will study and implement tax cuts of a larger scale and more significant fee reductions for companies, Finance Minister Liu Kun said on Monday, after the State Administration of Taxation’s chief told Xinhua that the department is planning tax cuts to back the private sector.

** Concerns subsided about risks in the financial sector after state-owned China Securities Journal reported on Monday, citing official sources, that lending targets are not set in stone. The report came after Guo Shuqing, head of the banking and insurance regulator, said last week at least a third of big banks’ new loans should be allocated to private companies.

** With the introduction of new policy measures, risk appetite is on the rise in the Chinese equity market, analysts at Chengdu-based Chuancai Securities wrote in a note on Monday.

** “The A-share market is entering its latter phase of corrective rebound,” said the analysts. “We will focus on high quality growth stocks in artificial intelligence, 5G, cloud computing and chipmakers, and blue chips in the financial, real estate and pharmaceutical sectors.”

** But investors at home and abroad are still cautious, said Steven Leung, head of sales at the brokerage UOB Kay Hian in Hong Kong.

** “We’ve had many policy statements coming out recently, you can’t expect the same degree of impact each time,” he said. “Also, the fact that regulators are telling Chinese banks what to do, or what not to do, will be viewed negatively, especially by foreign investors.”

** In Hong Kong, the Hang Seng Index was up 0.3 percent at 25,681.27, while the index for Chinese H-shares listed in Hong Kong was little changed.

** Investors are watching two key events in local and global markets this week, Leung said.

** “A lot of investors are waiting for Tencent’s earnings,” he said. “They are also keeping an eye on Italy’s deadline.”

** Tencent Holdings is due to announce its third quarter earnings on Wednesday. The stock finished the morning session 1.9 percent lower, making it the worst performer in the Hang Seng.

** Italy has until Tuesday to submit a revised budget draft for the European Union’s approval, but there are few signs of progress.

** Around the region, shares eased in early trading on Monday. MSCI’s Asia ex-Japan stock index was weaker by less than 0.1 percent while Japan’s Nikkei index was up by about 0.1 percent.

** The yuan was quoted at 6.9615 per U.S. dollar as of 04:18 GMT, 0.08 percent weaker than the previous close of 6.956.

** The largest percentage gainers in the main Shanghai Composite index were Shandong Jiangquan Industry Co Ltd, Time Publishing and Media Co Ltd, and Jiangsu Safety Wire Rope Co Ltd, all up by 10.1 percent.

** The top gainers among H-shares were ZhongAn Online P & C Insurance Co Ltd, up 3.6 percent, followed by GF Securities Co Ltd, gaining 3.5 percent and Huaneng Power International Inc, up by 2.2 percent.

** As of 04:25 GMT, China’s A-shares were trading at a premium of 17.9 percent over the Hong Kong-listed H-shares.

Reporting by Noah Sin; Editing by Amrutha Gayathri

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