China, HK stocks rebound as report on Beijing's new budget deficit plan lifts sentiment
Updates to market close
By Summer Zhen
HONG KONG, Dec 18 (Reuters) -China and Hong Kong stocks rebounded on Wednesday, as investor sentiment was propelled by a Reuters report on China planning a record budget deficit for 2025 and Beijing's call for state-owned companies to boost market value.
** The Shanghai Composite index .SSEC closed up 0.62% at 3,382.21, after dropping 0.73% on Tuesday, while the blue-chip CSI 300 index .CSI300 gained 0.51%.
** In Hong Kong, the Hang Seng index .HSI was up 161.60 points or 0.82% at 19,815.30, after falling 0.5% in the previous session.
** The Hang Seng China Enterprises index .HSCE rose 1.08% to 7,166.5, while the Hang Seng Tech index .HSTECH jumped 1.8%.
** Gains expanded in the afternoon, with most sectors closing higher. Semiconductors < .CSI931865> and state-owned firms .CSI000825 adde d 1.6 % and 1%, respectively.
** State-owned firms listed in Hong Kong .HSCSOE climbed 0.8%.
** The State-owned Assets Supervision and Administration Commission on Tuesday issued guidelines, urging state-owned firms to improve market value management of listed companies, including measures such as mergers and acquisitions, information disclosure and stock buybacks.
** Additionally, investors raised bets of more forceful fiscal stimulus after a Reuters report said Chinese leaders have agreed to raise the budget deficit to 4% of gross domestic product (GDP) next year, the highest on record, while maintaining an economic growth target of around 5%.
** Morgan Stanley called the potential plan positive, citing the report.
** It suggests that "Beijing is willing to set a high growth target and record fiscal budget to boost market confidence," the brokerage said, adding that details will unlikely be known until March.
** Meanwhile, China's central bank vowed zero tolerance towards bond market misbehaviours, in response to recent bond buying frenzy that pushed yields to record lows. nL1N3NJ05R
** The smaller Shenzhen index .SZSC ended up 0.58%, while the start-up board ChiNext Composite index .CNT was unchanged.
** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 0.32%, while Japan's Nikkei index .N225 closed down 0.72%.
Reporting by Summer Zhen; Editing by Sumana Nandy and Varun H K
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