China stocks close flat amid COVID outbreaks, property woes

China stocks closed almost flat on Friday, as COVID-19 flare-ups and property-sector risks raised worries about growth prospects in the world's second-largest economy. The blue-chip CSI300 index rose 0.1% to 4,238.23, while the Shanghai Composite Index lost 0.1% to 3,269.97.

China stocks closed almost flat on Friday, as COVID-19 flare-ups and property-sector risks raised worries about growth prospects in the world's second-largest economy.

The blue-chip CSI300 index rose 0.1% to 4,238.23, while the Shanghai Composite Index lost 0.1% to 3,269.97. The Hang Seng index rose 0.2% to 20,609.14, while the China Enterprises Index gained 0.1% to 7,106.70.

** For the week, the CSI300 Index edged down 0.2%, while the Hang Seng Index rose 1.5%. ** Foreign investors sold 3.73 billion yuan ($550 million) worth of Chinese shares through the stock connect scheme this week.

** "A-share sentiment was largely flat in the past week," Morgan Stanley said in a note. "Investors remain sensitive to COVID developments, especially the cluster outbreaks in Guangxi and Gansu, and continuous fermentation of mortgage delinquency." ** "We also view potential downward earnings estimate revision acceleration and spillover effect from any further US market correction as near-term dragging factors."

** China reported 1,011 new coronavirus cases for Thursday. The domestic daily caseload has hovered around 1,000 recently, denting sentiment and clouding the prospect of an economic recovery. ** A growing nationwide boycott by homebuyers of mortgage payments sent on unfinished projects has rekindled investor concerns about China's slumping property sector this week and raised fears that banks could face hefty writedowns.

** China's banking and insurance regulator urged banks to make adequate provisions for souring assets and classify risk prudently. ** Semiconductor shares lost 1.7% and healthcare firms dropped 1.2%, while automobiles rose 1.3%.

** Investors are awaiting the U.S. Federal Reserve policy meeting next week, and expectations of a 100-basis-point interest rate hike have faded in favor of a 75-bp move. ** The market will also closely monitor the July Politburo meeting, where China's top decision-making body will discuss economic policies for the rest of the year.

** Tech giants listed in Hong Kong rose 0.3% after China's cybersecurity regulator concluded a probe on Didi Global, removing near-term uncertainty. ** Separately, futures and options based on China's small-cap CSI 1000 Index started trading, spawning fresh products and strategies from fund managers seeking to capitalize on the new hedging instruments.