China stocks drop as Covid overshadows stimulus; Hong Kong rises

BEIJING, Nov 24 — China stocks fell today, as concerns over record-high domestic daily Covid-19 cases overshadowed optimism from fresh economic stimulus, while Hong Kong shares tracked Asian markets higher amid hopes that the pace of US rate hikes will slow.

The CSI300 index fell 0.4 per cent, while the Shanghai Composite Index lost 0.3 per cent. Hong Kong benchmark Hang Seng rose 0.8 per cent.

Rising Covid-19 infections in major cities including Beijing, Shanghai and Guangzhou dimmed growth prospects, even as the government rolled out a series of policies to support the troubled property sector, and flagged plans to cut banks’ reserve requirement ratio (RRR) to aid the economy.

China yesterdday reported 31,444 new local Covid cases for Nov. 23, its highest daily number since the start of the pandemic nearly three years ago. Chinese cities imposed more curbs to rein in the pandemic.

Nomura expects China’s central bank to cut RRR by 25 basis points in the next couple of weeks, or even days, after the State Council said late on Wednesday it will use monetary tools to support the economy.

But “the RRR is likely to only have a limited positive impact, as we believe the real hurdle for the economy lies in local officials’ more zealous implementation of Covid restrictions rather than insufficient loanable funds,” Nomura China economist Ting Lu wrote in a note.

China’s consumer and IT stocks led the decline, while energy and healthcare shares rose.

Anti-infection drug makers, including Jinling Pharmaceutical Co and Hunan Fangsheng Pharmaceutical Co soared.

In Hong Kong, Chinese developers jumped more than 6 per cent, after China’s biggest banks agreed to provide billions of dollars in credit lines to cash-strapped developers.

Most Asian markets rose, amid signs the US Federal Reserve will likely slow the pace of interest rate hikes soon. — Reuters

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