China stocks rise on boost of new energy vehicles, foreign inflows

Leading the gains on Monday, the CSI new energy vehicles index jumped 5.7% after Huawei's launch of automated-driving solutions on Sunday. Also helping support the market, foreign investors purchased a net 14.2 billion yuan ($2.18 billion) worth of A-shares via the Stock Connect linking the mainland and Hong Kong, according to Refinitiv data.

China stocks started the week on a firm note on Monday led by robust gains for new energy vehicles firms, while strong foreign inflows also helped sentiment.

The CSI300 index rose 2.1% to 5,069.66 points at the end of the morning session, while the Shanghai Composite Index gained 1.3% to 3,471.17 points. Leading the gains on Monday, the CSI new energy vehicles index jumped 5.7% after Huawei's launch of automated-driving solutions on Sunday.

Also helping support the market, foreign investors purchased a net 14.2 billion yuan ($2.18 billion) worth of A-shares via the Stock Connect linking the mainland and Hong Kong, according to Refinitiv data. "Driven by declining interest rates for the short-term and upbeat corporate earnings, the A-share market is expected to continue rebound," Southwestern Securities noted in a report.

China's state planner expects the Consumer Price Index (CPI) to rise mildly this year and remain within the official target, its spokesperson Meng Wei said on Monday. Though traders and analysts remain cautious due to worries about liquidity and valuations. "The stock market will remain rangebound and I don't see a reversal for now that points to a continued uptrend, as valuations of many blue-chips, remain lofty which could take years for the market to digest," said Niu Chunbao, chairman at Wanji Asset, a Shanghai-based private securities fund.

"Near-term, the pain of tightness should still sustain as we expect another 0.5-0.6 percentage points of broad credit slowdown in 2Q21," Morgan Stanley analysts including Laura Wang said in a report. "Largely in-line earnings results for 4Q and the surprise miss of GDP growth in 1Q2021 could curb motivation for the market to further revise up earnings growth estimates in the near term," MS added.

In Hong Kong, the Hang Seng index rose 0.8% to 29,201.88 points, while the Hong Kong China Enterprises Index gained 0.8% to 11,111.93. ($1 = 6.5250 Chinese yuan renminbi)