Chinese shares jump on recovery optimism, Fed pause bets

China and Hong Kong stocks saw their best day since March on Monday, tracking gains in global peers after U.S. authorities stepped in to limit the fallout from the collapse of Silicon Valley Bank (SVB). The rally also came as investors cheered more evidence of China's recovery, and after Beijing surprised by keeping the head of the central bank and finance minister in their posts at the annual session of parliament on Sunday.

China and Hong Kong stocks saw their best day since March on Monday, tracking gains in global peers after U.S. authorities stepped in to limit the fallout from the collapse of Silicon Valley Bank (SVB).

The rally also came as investors cheered more evidence of China's recovery, and after Beijing surprised by keeping the head of the central bank and finance minister in their posts at the annual session of parliament on Sunday. The blue-chip CSI 300 Index closed 1.1% higher, and Hong Kong's Hang Seng benchmark surged 2%, both logging their biggest daily gains since March 1.

The U.S. regulators' move "cut off the spread of pessimism among depositors in the short term, gave the market confidence, and prevented bank runs," said Pang Xichun, research director at Nanjing RiskHunt Investment Management Co. "Uncertain fundamentals put pressure on the U.S. dollar and led to passive appreciation in the yuan, which will benefit China assets in the near term."

Analysts at Goldman Sachs wrote: "In light of the stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its next meeting on March 22." In a joint statement, the U.S. Treasury and Federal Reserve announced a range of measures to stabilise the banking system and said depositors at SVB would have access to their deposits on Monday, sending U.S. stock futures up.

Tech giants listed in Hong Kong rallied 2.9%, and China's computer shares soared 4.2%. New Chinese Premier Li Qiang sought to reassure the country's private sector, and President Xi Jinping said China must achieve greater self-reliance and strength in science and technology.

Shanghai Pudong Development Bank, which has a joint venture with SVB, slipped 1.3% even after the venture said it has a sound corporate structure and an independently operated balance sheet. China's banking stocks, meanwhile, edged up 0.4%.

Some Chinese-based firms said they had small exposures to SVB. Their share performances varied on Monday, with Broncus Holding Corporation advancing 4% while CStone Pharmaceuticals was down 2.2%. Further supporting sentiment, China reported unexpectedly strong credit growth for February, with money supply expanding at the fastest pace in nearly 7 years, as Beijing looked to support a nascent economic recovery amid rising global risks.

"Nonetheless, much still depends on the strength of the Chinese economic recovery. Investors will closely monitor the activity data scheduled for release this Wednesday to gauge the state of the Chinese economy," said Redmond Wong, Greater China market strategist at Saxo Markets. Beijing's decision to keep the heads of the central bank and finance minister in their posts was seen as prioritising continuity as economic challenges loom at home and abroad.

The move reflected "policymakers' goal of ensuring smooth transition amid institutional reform of the financial regulatory bodies," Goldman Sachs analysts wrote.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)