China shares climbed on Wednesday as hopes of an economic recovery and regulatory and retail support helped the market extend gains into a seventh session.
** At the midday break, the Shanghai Composite index was up 0.7% at 3,370.23. ** The blue-chip CSI300 index was up 0.6%, with its financial sector sub-index higher by 1.1%, while the real estate index was down 0.8% and the healthcare sub-index was flat. ** Chinese H-shares listed in Hong Kong rose 1.2%, while the Hang Seng Index was up 0.3% at 26,063.51. ** The smaller Shenzhen index gained 0.9% and the start-up board ChiNext Composite index was higher by 1.2%. ** Chinese stocks broke five-year highs on a state-endorsed rally, which spurred a retail investor splurge.
** Surging volumes and a deluge of foreign money began the run-up in share prices last week, which gained pace after government mouthpiece China Securities Journal called for a healthy bull market to aide Beijing’s diplomatic hand on Monday.
** Morgan Stanley raised target prices for the CSI300, MSCI China, Hang Seng and H-share indexes. “A-shares are benefiting from strong new fund launches and rising retail investor account openings in the context of regulatory support and an ongoing market reform push,” the bank’s analysts said in a note.
** Nicholas Yeo, head of China equities at Aberdeen Standard, urged caution. “The recent sharp rally in China’s CSI300 Index reminds us this is an inefficient, retail-driven market. Investors will see more periods of overbuying. What’s important is not to follow the market blindly,” he said in a note. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.4%, while Japan’s Nikkei index was down 0.5%. ** The yuan was 0.09% weaker at 7.0193 per U.S. dollar at 0409 GMT.