Shanghai benchmark hits decade high as easing deflation lifts sentiment

Mainland China and Hong Kong stocks advanced on Friday, with the Shanghai benchmark touching a decade-high level, as investor sentiment ‌improved on signs of easing deflationary pressures. ** China's annual consumer price inflation accelerated to a 34-month high in December, while producer deflation persisted, backing ⁠market expectations for additional stimulus to shore up soft demand.

** The benchmark Shanghai Composite index surged to an intraday high of 4,121.7 points, its highest level since July 2015, before easing to a 0.3% ​gain at 4,095.33 points by the midday break. ** The blue-chip CSI300 index inched 0.1% ‍higher.

** In Hong Kong, the benchmark Hang Seng Index was up 0.03%. ** "We remain positive on Chinese equities, partly because we expect China's efforts to balance domestic demand and supply to be supportive for the earnings outlook and to ⁠drive upward consensus ‌earnings estimate revisions," ⁠said William Bratton, head of cash equity research for APAC at BNP Paribas Exane.

"However, given the expected sequencing of ‍realised impacts, we have a near-term preference for sub-industries in materials, industrials, and technology over their direct consumer-facing peers." ** ​CSI 300 Material sub-index rose 1.35%, while the Hang Seng Material Index gained 2.46% at ⁠the lunch break on Friday.

** Signs of easing trade tensions between the world's two largest economies, authorities' pledge to boost ⁠domestic demand and support the broad economy should continue to support A shares, said Zeng Wanping, investment director at Panshi Fund. And he also noted that the overall valuation of A ⁠shares are not very high. ** Separately, Chinese artificial intelligence model developer MiniMax Group jumped 50% in its ⁠Hong Kong market debut ‌on Friday after raising HK$4.8 billion.

** Market will shift their focus to trade and credit lending data due next week for more clues ⁠on the health of the world's second largest economy.

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