China stocks edge higher as state media, fund managers calm investors

** For the week, the CSI300 index went down 3.3% as of midday break, while the Hang Seng Index lost 5.4%, both set to drop the most since Aug. 20. ** "Sentiment had the largest weekly drop post September 2020," Morgan Stanley said in a note.

China stocks inched higher on Friday, after state-backed newspapers and fund houses tried to calm investors and boost sentiment, following a 2% slump in a main benchmark after U.S. Federal Reserve turned more hawkish. The CSI300 index rose 0.1% to 4,623.36 at the end of the morning session, while the Shanghai Composite Index gained 0.1% to 3,396.07.

The Hang Seng index dropped 0.8% to 23,606.45. The Hong Kong China Enterprises Index lost 0.8%, to 8,221.57. ** For the week, the CSI300 index went down 3.3% as of midday break, while the Hang Seng Index lost 5.4%, both set to drop the most since Aug. 20.

** "Sentiment had the largest weekly drop post September 2020," Morgan Stanley said in a note. "Divergence between US/China policy cycles continues since the year began and equity investors could sell ahead of CNY holidays to avoid uncertainty." ** Mainland Chinese markets will be shut for a week-long Lunar New Year holiday, starting Jan. 31.

** State-backed securities newspapers wrote in editorials citing experts that overseas risks could only have a limited impact on China, while a slew of Chinese mutual funds bought their own fund products, in efforts to soothe investors after shares hit nearly 16-month lows on Thursday. ** Shares of brokerages, defence and tourism jumped more than 1.3% each.

** Energy stocks lost 2.1%, with coal miners falling 3%. ** In Hong Kong, the Hang Seng Tech Index dropped 2%, set to post a weekly fall of more than 10%, amid concerns over geopolitical unrest and the prospect of a more hawkish stance by the Fed.

** The Hang Seng Finance Index retreated 0.9%, with AIA Group and Hong Kong Exchanges and Clearing Ltd down 3.2% and 4.2%, respectively, to become the two biggest point contributors dragging the Hang Seng Index.