Chinese stocks rise on recovery optimism, bet on Fed pause

SHANGHAI, March 13 (Reuters) – Stock markets in China and Hong Kong recorded their best day since March on Monday after their global counterparts gained after U.S. authorities intervened to limit the fallout from the Silicon crunch. Valley Bank (BLS).

The rally also came as investors welcomed more evidence of China’s recovery and after Beijing surprised by keeping the central bank chief and finance minister in their posts during the annual session of parliament on Sunday.

China’s market benchmark closed 1.1% higher and Hong Kong’s Hang Seng index rose 2%, both posting their largest daily gains since March 1.

The move by U.S. regulators “reduced the spread of pessimism among short-term depositors, reassured the market and prevented banks from fleeing,” said Pang Xichun, head of research at Nanjing RiskHunt Investment Management Co.

“Uncertain fundamentals have put pressure on the US dollar and led to passive appreciation of the yuan, which will benefit Chinese assets in the short term.”

Goldman Sachs analysts wrote: “Given the strains in the banking system, we no longer expect the FOMC to raise rates at its next meeting on March 22.

In a joint statement, the US Treasury and Federal Reserve announced a series of measures aimed at stabilizing the banking system and said SVB depositors would have access to their deposits on Monday, sending US stock futures higher.

Hong Kong-listed tech giants rose 2.9% and Chinese IT stocks climbed 4.2%.

New Chinese Premier Li Qiang has tried to reassure the country’s private sector, and President Xi Jinping has said China needs to achieve greater autonomy and strength in science and technology.

Shanghai Pudong Development Bank, which has a joint venture with SVB, lost 1.3% even after the company said it had a strong corporate structure and an independent operating record.

Shares of Chinese banks, meanwhile, rose 0.4%.

Some China-based companies claimed to hold small stakes in SVB. Its stock performance was mixed on Monday: Broncus Holding Corporation rose 4%, while CStone Pharmaceuticals fell 2.2%.

In addition, China recorded surprisingly strong credit growth in February, with money supply growing at the fastest rate in nearly 7 years, as Beijing tried to support a nascent economic recovery amid mounting global risks.

“However, much still hinges on the strength of China’s economic recovery. Investors will be watching closely the activity data due out on Wednesday to assess the state of China’s economy,” said market strategist Redmond Wong. for Greater China. China, Hong Kong, Macau and Taiwan) from Saxo Markets.

Beijing’s decision to keep central bank advisers and the finance minister in their posts was seen as a continuity priority in the face of looming economic challenges inside and outside the country.

The move reflects “monetary policymakers’ goal of ensuring a smooth transition amid institutional reform of financial regulators,” Goldman Sachs analysts wrote.

(Reporting by Jason Xue and Brenda Goh; Editing in Spanish by Benjamín Mejías Valencia)