China stocks edge up on policy support pledge

SHANGHAI: China's stocks saw a slight increase on Tuesday, following the nation's cabinet pledge to enhance counter-cyclical policy support to tackle growing economic challenges, despite trading being relatively light before a national holiday. Hong Kong's shares, however, experienced a decline. China's top-performing index, the CSI300, remained nearly unchanged by midday, while the Shanghai Composite rose by 0.1%.

Hong Kong's key Hang Seng index dropped by 0.6%. Real estate developers were among the key drivers of the gains onshore, with Vanke shares surging nearly 8% after the State Council meeting committed to implementing measures to stabilize the property market. Analysts from Goldman Sachs forecast that policymakers might widen the use of housing provident funds to modestly lower mortgage rates, and more major cities may introduce local housing easing measures.

The sentiment among AI component manufacturers showed a slight improvement, with the 5G Communication Index up by 0.8% and the tech-focused STAR50 Index increasing by 0.6%. However, the market sentiment was negatively impacted by rising US Treasury yields and inadequate liquidity prior to the week-long holiday, according to analysts at Northeast Securities. They noted that following the significant declines, with mounting negative sentiments, quality assets had once again become more appealing.

China's week-long National Day holiday commences on Thursday, with onshore trading resuming on October 8. The Hang Seng Innovative Drug Index climbed by 3.3%. Hong Kong-listed tech giants experienced a 1.4% decrease. Shares of fast-fashion platform Shein Global Holdings plummeted to their lowest level since the firm's listing on September 1.