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China, HK shares rise as Beijing vows more support for consumption, AI
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Pedestrians walk past a sign showing the Hang Seng stock market index in Hong Kong, China, on Sept. 27, 2024. (AFP/Peter Parks)
C
hina and Hong Kong shares rose on Wednesday after Beijing set an ambitious economic growth target and vowed more support for domestic consumption and the tech industry as a trade war with the United States heats up.
The blue-chip CSI300 Index and the Shanghai Composite closed up 0.5 percent and 0.4 percent, respectively, recouping losses earlier in the session.
Hong Kong's Hang Seng Index rose 2.8 percent, while the Hang Seng Tech Index climbed 4 percent.
China's top policymakers announced a 2025 growth target of roughly 5 percent, record 4 percent deficit-to-GDP ratio and inflation target of 2 percent as expected, as its rubber-stamp parliament, the National People's Congress (NPC), began its annual meeting.
Among sector-specific measures, the government said it will support the application of large-scale AI models, mentioning AI models for the first time in a government work report, after the global fanfare over Chinese AI startup DeepSeek.
The government also promised a "special action plan" to stimulate consumption and set aside 300 billion yuan ($41.27 billion) to support a recently-expanded consumer subsidy to revive sluggish spending at home as exports are expected to come under mounting pressure from US tariffs.
The announcements were largely in line with expectations and the market reaction was quite positive, said Jason Chan, senior investment strategist at Bank of East Asia.
"The policy direction also clearly stressed support for AI and the tech sector, which are lending more help to the Hong Kong markets where they have bigger weightings."
AI stocks led gains, with the gauge tracking related companies listed in Hong Kong surging 4 percent and the onshore CSI AI Industry Index adding 1.4 percent.
The consumer discretionary sector jumped 0.7 percent, while the banking subindex advanced 1.7 percent on Beijing's plans to issue special debt of 500 billion yuan to re-capitalise major state banks.
The tech policy tone set at the NPC gathering could offer renewed momentum to China's stock rally.
Chinese H-shares have surged as much as 31 percent from January's trough to a three-year high as DeepSeek's launch of a low-cost AI model set off a re-rating in the beaten-down market and triggered fund rotations.
However, the run-up has started to show signs of fatigue owing to patchy economic data and the escalating Sino-US tit-for-tat trade war, prompting investors to book profits as risk appetite soured.
The US doubled its latest duties on Chinese goods to 20 percent on Tuesday and Beijing quickly responded with levies of its own.
China's top economic, finance and markets officials will host a joint press conference on the sidelines of the annual parliament meeting on Thursday afternoon, which could provide more details about the government's economic plans and policy priorities for the year ahead.
