China stocks struggle near one-year lows despite fresh government support measures

ETMarkets.com

The benchmark CSI300 Index and the Shanghai Composite Index were roughly flat at the midday break, while Hong Kong's Hang Seng Index also traded little changed.

China's central bank said on Wednesday that banks had applied to borrow more than 200 billion yuan ($29.98 billion) to finance listed companies' share purchases under an upgraded re-lending scheme. The announcement came a day after the People's Bank of China (PBOC) conducted 100 billion yuan worth of swaps with brokers and fund management companies to support share buying.

The measures were part of a broader package announced by Beijing late on Monday to arrest a prolonged market decline. However, investors remained cautious amid concerns over China's economic weakness and persistent pressure on technology stocks.

Reuters reported that the CSI300 plunged 8.5% in October, marking its worst monthly performance since early 2016, as concerns over China's economic outlook and a selloff in technology shares weighed on investor confidence.

Wu Weizhi, founder of Zhong Ou Rabbit Asset Management, said the market would need time to recover from the recent selloff triggered by overcrowded positions in technology stocks. However, he pointed to improving signals across several sectors and companies whose valuations had fallen sharply.

US midterm election uncertainty weighs on sentiment

Investors were also assessing the potential implications of the US midterm election results for global markets, particularly Washington's relationship with Beijing and policies governing artificial intelligence.

China Galaxy Securities said companies generating a significant share of their revenue from the US could be affected by potential changes in Washington's political direction. Hong Kong equities, meanwhile, could be more exposed to global market volatility triggered by the election outcome.

AI stocks rebound, property shares decline

AI-related stocks advanced in China on Wednesday, tracking an overnight recovery in US chipmakers' shares. However, the gains were insufficient to drive a broader market recovery as weakness in real estate and telecommunications stocks offset advances in technology counters, according to Reuters.

In Hong Kong, biotechnology stocks gained, helping cushion declines in technology and property shares.

Despite Beijing's latest efforts to restore confidence through liquidity support and financing measures, investors remained reluctant to make aggressive bets as they awaited greater clarity on China's economic outlook and the potential impact of political developments in the United States.