(Bloomberg) — Chinese shares advanced after mainland markets reopened from a week-long holiday, with consumer staples and tech shares showing resilience in the face of regulatory and economic uncertainty.
The benchmark CSI 300 Index closed up 1.3%, with top performers including Huadong Medicine Co. and China Fortune Land Development Co. Despite a tumultuous period globally while onshore markets were closed, local traders started Friday on the front foot, taking a cue from a buoyant session overnight in China stocks listed on Wall Street.
“There’s a risk-on sentiment in the market — the U.S. rebounded strongly, Hong Kong is back to where it started during Mid-Autumn festival,” Bocom International chief strategist Hao Hong said on Bloomberg TV. “There should be a markup on the technical basis for the mainland market today.”
The CSI’s sub-indexes of consumer staple and discretionary stocks advanced 2.5% and 3.2%, respectively. Still, trading volumes on the CSI were lower than the average over the past 30 days.
How enduring Friday’s gains will be remains uncertain for investors amid problems ranging from an energy shortage to debts of property developers and an ongoing regulatory crackdown on private enterprise.
The China Evergrande Group debt crisis still casts a shadow over the wider market. A dollar-bond default this week by Fantasia Holdings Group Co. is a reminder of the risks.
The People’s Bank of China also drained the most short-term liquidity from the banking system in a year on a net basis as it reduces liquidity support following the holiday. Government bond futures declined.
On Thursday, PBOC Governor Yi Gang reiterated that authorities would continue taking steps to curb monopolistic behavior among internet platform companies.
For now, bargain hunters and long-term buyers are back chasing China’s tech giants, encouraged by a relative lull in the flow of negative news in the sector. NetEase Inc. and Tencent Holdings Ltd. both rose at least 4% intraday.
Read: Tencent Shares Have ‘Priced in’ Gaming Crackdown, Jefferies Says
“It’s all about short term stories with knee jerk reactions to every headline,” said Gary Dugan, chief executive officer at the Global CIO Office.
(Updates prices throughout)
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