HONG KONG, Sept 5 – China’s stocks steadied on Friday after steep losses in the previous session, but remained on course for their biggest weekly fall in five months as a stellar rally started to lose some steam.
The Shanghai Composite Index reversed losses at the opening hour, and climbed 0.4% to 3,778.95 by the midday break. Still the benchmark has declined 2.1% this week, on track for the sharpest weekly drop since early April.
China’s blue-chip CSI300 Index rebounded 0.9%, and was also down 2.1% for the week in its biggest decline in five months.
Tech shares, which took the hardest beating in the correction on Thursday, led the recovery on Friday. The AI sector was up 2.8% and the semiconductor sector climbed 1.6%. Chip designer Cambricon bounced 5.6% after sinking some 20% earlier in the week.
Selling pressure eased on Friday as a wave of profit-taking after China’s largest-ever military parade subsided. Markets have also largely shaken off the jitters triggered by a Bloomberg News report that Beijing is considering measures to curb excessive stock speculation.
China’s central bank said on Thursday it would inject 1 trillion yuan into the banking system on Friday via outright reverse repo operations to keep liquidity “reasonably ample”, interpreted by some as a gesture to calm investors.
“We have not seen extreme bull market euphoria,” said Wang Zhuo, partner of Shanghai Zhuozhu Investment. “After all, armies of retail investors have not yet rushed into the market, and there’s still room for fresh inflows.”
Still, the decline this week snapped a two-month surge that had pushed Shanghai’s benchmark to 10-year highs, powered by record sums of leveraged bets chasing the rally. Analysts at China Securities said trading could remain volatile in short term as the market enters a consolidation period.
“Taking some of the air out of the frothy part of the market is setting up for a more sustainable path down the line,” said Jerry Wu, a portfolio manager at Polar Capital, based in London.
“It will be a healthy correction and I don’t think it changes the direction of travel, which we do believe is a sort of innovation-driven rally.”
In Hong Kong, the benchmark Hang Seng was up 0.6% on Friday, heading for a weekly gain of 0.1%, while the tech sector rebounded 0.8%.
This article was generated from an automated news agency feed without modifications to text.
