China stocks flat as zero-COVID policy, uncertainty weigh

** China's cabinet said on Wednesday it will increase the credit quota for policy banks by 800 billion yuan ($120 billion) for them to support infrastructure construction. ** "With frequent measures introduced to support the economy, A-shares recorded their biggest rebound in May since the correction," said Chen Mengjie, chief strategist at Yuekai Securities, as the Shanghai Composite Index jumped 4.6% in May, the biggest monthly rise in a year.

China stocks struggled for direction on Thursday, as initial euphoria over additional stimulus measures launched to support an ailing economy countered investor concerns over a potential rebound in cases and the zero-COVID policy. ** The CSI300 index was flat at 4,080.90 points by the end of the morning session, and the Shanghai Composite Index held its ground at 3,185.52 points.

** The Hang Seng index dropped 1.6% to 20,960.45 points. The Hong Kong China Enterprises Index lost 1.7% to 7,220.36. ** China's cabinet said on Wednesday it will increase the credit quota for policy banks by 800 billion yuan ($120 billion) for them to support infrastructure construction.

** "With frequent measures introduced to support the economy, A-shares recorded their biggest rebound in May since the correction," said Chen Mengjie, chief strategist at Yuekai Securities, as the Shanghai Composite Index jumped 4.6% in May, the biggest monthly rise in a year. ** "The market might see the range-bound performance in June, but we are not pessimistic, the darkest hour has passed."

** China's cabinet announced a package of 33 measures covering fiscal, financial, investment, and industrial policies on Tuesday to revive its pandemic-ravaged economy. ** Shanghai sprung back to life after the financial hub lifted most anti-COVID curbs, but worries over a rebound of cases and the zero-COVID policy lingered.

** "Due to still-elevated COVID-related uncertainty, we see big downside risks to our current annual GDP growth forecast of 3.9% for 2022," said Nomura in a note. ** China will aim to ensure that its grids source about one-third of power from renewable sources by 2025, up from 28.8% in 2020, the state planning agency said on Wednesday in a new "five-year plan" for the renewable sector.

** New-energy shares rose 2.2%, semiconductors gained 2.8%, while real estate developers lost 1.7%, and energy stocks dropped 2%. ** Tech giants listed in Hong Kong declined 1.6%, with index heavyweights Alibaba and Meituan plunging roughly 3% each.