SHANGHAI: China stocks rallied for the sixth straight session on Wednesday, powered by cyclical sectors such as steel, highways and property, as weak economic data raised investors’ hopes of fresh stimulus.
The Shanghai Composite Index, which hit the highest level in almost seven years on Tuesday, ended Wednesday morning up 0.9 percent at 3,532.99 points, having firmly stood above the psychological resistance level of 3,400 points. The CSI300 index rose 1.0 percent, to 3,796.20 points.
Hong Kong stocks also rose, with the Hang Seng index up 1.0 percent, to 24,145.14 points.
Data earlier in the day showed China’s average new home prices fell at the fastest pace on record in February, posing a further risk to the government’s newly minted economic growth target of around 7 percent for this year, which in itself would mark a quarter-century low.
The weak reading following numbers on Tuesday which showed foreign direct investment (FDI) in China grew at its weakest pace in six months.
But real estate stocks jumped, with the Bank of Communications expecting the government will take measures to bolster the market, including lowering taxes and loosening requirements for mortgage lending.
“Over the weekend, Premier Li Keqiang vowed to support the economy if it continues to slide, so the worse the data, the sooner stimulus policies will be rolled out,” said Luo Wenbo, analyst at Qilu Securities.
“Investors wouldn’t have been so bold if the premier hadn’t made that promise.”
