China stocks extend rebound on policy hopes; HK also up

** But real estate stocks in China and Hong Kong fell amid signs the sector is yet to find a bottom. ** Contract sales volume for China's top 100 developers contracted sharply by 58.6% in February from a year earlier, suggesting "a further deterioration in the property market at the start of 2024," Nomura said in a note.

China shares gained on Friday, extending a rebound triggered by intensive market support measures as investors await cues of stimulus from Beijing's key political gathering next week, while Hong Kong stocks also rose. ** China's blue-chip CSI300 Index was up 0.3% by the lunch break, having bounced 13% from the five-year lows hit a month ago. The Shanghai Composite Index edged up 0.1%.

** Hong Kong's share benchmark Hang Seng climbed 0.8%, led by tech stocks. ** Sentiment in China's stock market improved after the new chairman of China's securities watchdog undertook a raft of measures to revive confidence, including fresh curbs on short-selling and a crackdown on trading misbehaviours.

** "We also believe that the massive global fund outflows we saw throughout the past several quarters has largely completed," Morgan Stanley said in a note explaining the rebound. ** The Wall Street bank said it would monitor China's policy stance, early signs of reflation, and health of the property market to gauge if the market recovery is sustainable.

** Underlining the need for more stimulus, China's manufacturing activity in February contracted for a fifth straight month. ** Moody's Analytics expects more support measures to be announced during the annual gathering of the National People's Congress that starts on March 5. They include a spending package to aid real estate and manufacturing, and direct handouts to households to boost domestic consumption.

** Most sectors rose in China. An index tracking defence security index rose 1.3%, while artificial intelligence stocks jumped 2.1%. ** But real estate stocks in China and Hong Kong fell amid signs the sector is yet to find a bottom.

** Contract sales volume for China's top 100 developers contracted sharply by 58.6% in February from a year earlier, suggesting "a further deterioration in the property market at the start of 2024," Nomura said in a note. ** The brokerage said the most effective policy for central government is to set up a central bank-backed special fund to help deliver the presold homes.

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