China stocks struggle on weak sentiment after state fund's support
China stocks edged up in early trade on Tuesday while Hong Kong shares slipped, as markets struggled to rebound amid a lingering weak sentiment after state fund Central Huijin bought exchange-traded funds (ETFs) to bolster the market.
China's blue-chip CSI 300 Index added 0.3% and Hong Kong's Hang Seng Index lost 0.3%, both hovering around the lowest levels in the year.
The weakness comes against broad fragile sentiment around the globe on risks of continued fighting between Israel and Hamas. A gauge of global equity markets fell to an almost seven-month low on the outlook, as the benchmark U.S.
Treasury yield crossed just above 5%.
«This round of decline is mainly dominated by the pessimism in the market, coupled with a surge in U.S. bond yields and potential impact of geopolitical risks,» said analysts at Nanjing Securities in a note.
«But there has been some irrational over-correction, as investors shrugged off China's better-than-expected growth data.»
Central Huijin, which makes equity investments on behalf of China's central government, said it bought ETFs on Monday, and «will continue to increase holdings in future,» without giving ETF details.
«There should be a rebound after the move,» said Pang Xichun, research director at Nanjing RiskHunt Investment Management, pointing out that investors still had to monitor the outflows of foreign investors in the near future.
Overseas investors have been offloading Chinese shares at record speed in a declining market in recent months.
