China stocks rebound after cabinet's pledge to stabilise market

WASHINGTON: China stocks recovered from early losses on Tuesday, but still hovered near a five-year low hit in the previous session, after the country's cabinet pledged to take more effective measures to stabilise market confidence, while Hong Kong shares surged.

The cabinet meeting, chaired by Premier Li Qiang, said on Monday it will step up medium- and long-term fund injections in the capital market to strengthen stability as well as promote healthy development. The blue-chip CSI 300 Index edged 0.2% higher, while the Hang Seng Index jumped roughly 3% in early trade on Tuesday.

Risk appetite was further lifted by a Bloomberg News report that Chinese policymakers are seeking to mobilize about 2 trillion yuan ($278.53 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link. Still, the Shanghai Composite Index traded below the psychologically key 2,800-point mark amid relentless foreign outflows and a surge in short-selling that pummelled confidence, already dented by the region's creaking economy.

Tech giants listed in Hong Kong and mainland property developers soared roughly 5% each to lead the gains. In mainland markets, new energy shares added 2%. China anime comic gaming stocks climbed 2.5% after the gaming regulator took down draft rules to control spending in video games from its website, checks by Reuters showed.