China Stocks Surge Amid Sovereign Fund Boost

China stocks surged from near seven-month lows due to heavy buying by sovereign fund Huijin, elevating sentiment in sectors like insurance and technology. State-backed Central Huijin Investment significantly increased its stakes in major ETFs, driving substantial gains in the Shanghai Composite and other major indices.

China stocks saw a remarkable jump on Friday, recovering from near seven-month lows, following disclosures that sovereign fund Huijin had been on a buying spree. The news sent ripples through sectors such as insurance and technology, while Hong Kong shares reached a one-month high. Despite these gains, China stocks are still on track for their fourth consecutive monthly losses.

State-backed Central Huijin Investment has significantly bolstered its ownership in several blue-chip exchange-traded funds (ETFs). According to mid-year reports, Huijin tripled its stake in the E Fund CSI300 Index ETF to 67% in the first half of the year and increased its holdings in the ChinaAMC China50 ETF by 70%.

Midday trading saw the Shanghai Composite index climb 1.34% to 2,860.89 points, with gains also recorded in the financial, consumer staples, real estate, and healthcare sectors. Chinese H-shares listed in Hong Kong rose by 1.89%, and the Hang Seng Index jumped 1.76%. Around the region, MSCI's Asia ex-Japan index rose by 0.70%, while Japan's Nikkei index was up by 0.30%.