China stocks hover near 1-year low despite fresh support measures

SHANGHAI - China's stocks remained near one-year lows on Wednesday, despite the government's attempts to provide support amid investor caution ahead of the US midterm elections. The CSI300 Index and Shanghai Composite Index both hovered around flat by midday, while Hong Kong’s Hang Seng Index showed little change. The central bank reported that banks had applied for over 200 billion yuan to fund listed firms' share purchases under an upgraded re-lending scheme, following a 100 billion yuan swap with brokers and fund companies the previous day.

The market's decline this year has been among the worst globally, with the CSI300 shedding 8.5% in October, its worst month since early 2016. Wu Weizhi, founder of Zhong Ou Rabbit Asset Management, noted that it takes time for the battered market to recover after "over-crowded trades triggered a stampede" in tech stocks. However, he pointed out that many positive signals are emerging in sectors and companies that have experienced significant value drops.

The upcoming US midterm election results could impact China in various ways, including its relations with Washington and AI-related policies. Chinese companies with a significant portion of revenue from the US may be affected by any shifts in political winds, while the Hong Kong market might be more vulnerable to global market volatility resulting from the election results.

On Wednesday, AI-related stocks in China surged, following a rebound in US chip shares, but the broader market was dragged down by declines in real estate and telecom shares. In Hong Kong, biotech stocks experienced a rise, offsetting losses in tech and property shares.