China stocks erase losses on policy easing bets while Hong Kong cancels trading due to typhoon Kompasu warning

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© EPA-EFE A man walks past a screen showing inflation data outside an office building in Shanghai. Stocks slide on Wednesday on slowdown concerns. Photo: EPA-EFE

Stocks in mainland China rose for the first time this week as consumer companies attracted buyers on valuation appeal and traders bet even as traders bet the government will loosen policies to counter an economic slowdown. Hong Kong cancelled trading because of typhoon Kompasu.

The Shanghai Composite Index added 0.5 per cent to 3,564.02 as of 2.30pm local time, reversing an earlier loss of as much as 0.9 per cent. The CSI 300 Index, which tracks the biggest companies on the Shanghai and Shenzhen bourses, jumped 1.2 per cent.

Liquor distiller Luzhou Laojiao led gains among consumer stocks, contributing the biggest gain to the broader market. Offcn Education Technology and other vocational education tutors also rallied after the State Council encouraged listed companies to engage in the industry.

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China’s September data foreign trade data offered a mixed picture, with exports rising by faster-than-estimated 28.1 per cent and imports growing 17.6 per cent that trailed projections. BlackRock, the world’s biggest money manager, said this week that China can no longer ignore slowdown signs without easing policies.

© Provided by South China Morning Post Pedestrians walk past a stock ticker outside the Exchange Square, which houses the Hong Kong stock exchange in Central on October 4. Photo: EPA-EFE

“Both numbers (on imports and exports) need to perform though, or else the China slowdown gremlins will win the day,” said Jeffrey Halley, an analyst at Oanda. “The governments “shared prosperity” drive will continue to be a headwind for China equities going forward.”

A gauge of consumer staple stocks on the CSI 300 surged 3.6 per cent, making it the best performer among all the 10 industry groups, after valuations fell to an average five-year low of 23 times estimated earnings, according to Bloomberg data. Luzhou Laojiao surged 6.1 per cent while Shanxi Xinghuacun Fen Wine and Kweichow Moutai gained at least 4.7 per cent.

Stocks opened for trading on weaker footing after energy producers from oil to coal stocks slid as an energy crunch receded, with top officials in Beijing calling for more power supply to meet industry demand. China Shenhua Energy, Shaanxi Coal Industry and PetroChina slumped at least 3 per cent.

Springsnow Food Group, a maker of chicken products based in the east province of Shandong, jumped by the 44 per cent daily limit to 16.99 yuan on the first day of trading in Shanghai.

Financial markets in Hong Kong are shut for the day after the Observatory retained its No. 8 typhoon warning signal up to 4pm local time as Kompasu edges closer to the city. Banks will also close for the day.

Other major markets in Asia were mixed, with the benchmarks in Japan and Taiwan retreating and those in South Korea and Australia rising. US stocks fell overnight as traders waited for the start of the corporate earnings report season.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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