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Financials

China stocks log fifth weekly gain on signs of economic recovery

(Updates to market close)

SHANGHAI, July 1 (Reuters) - China stocks closed lower on Friday, tracking Asian markets as investors fretted about global economic outlook, although the main indexes gained for a fifth straight week as domestic economy showed signs of recovery from the COVID-19 fallout.

Hong Kong market is closed for the Hong Kong Special Administrative Region Establishment Day.

The blue-chip CSI300 index fell 0.4% to 4,466.72, while the Shanghai Composite Index lost 0.3% to 3,387.64 points.

** For the week, the CSI300 index gained 1.6% and the Shanghai Composite index added 1.3%.

** Asian stock markets made a shaky start to the second half under growth clouds, while the S&P 500 closed out its worst first half since 1970 overnight.

** “Outside recession shock seems unavoidable, but the long-term performance of China stocks really depends on domestic fundamentals,” Guosheng Securities analysts said in a note.

** Lifting sentiment, a private-sector poll showed China’s manufacturing activity expanded at its fastest in 13 months in June, the first expansion in four months and matching with the findings in a Thursday official survey.

** China will issue 300 billion yuan ($44.78 billion) in financial bonds to replenish capital of key projects, or provide bridge financing for projects funded by special bonds, state media on Thursday quoted the cabinet as saying, in a move to help boost financing support for key investment projects.

** “This is yet another positive for the Chinese economy in the short run,” said Nomura analysts led by Ting Lu in a note. However, “Beijing will still very likely miss the ‘around 5.5%’ growth target.”

** The news pushed non-ferrous metal, infrastructure companies and construction engineers up between 0.8% and 1.9%.

** “Re-calibration of China’s COVID restrictions drove this week’s improved market sentiment, we believe, and should help boost investor confidence after the recently stepped up easing and tech regulation completion,” Morgan Stanley analysts said in a note.

** “We are incrementally constructive on Chinese equities and continue to recommend selectively adding back growth exposure in overall China allocation.”

** Tourism stocks tumbled nearly 5%, but were still up 7.5% this week as investors found comfort in the easing of COVID-19 rules.

** New homes prices in China rose at a slightly faster pace in June from a month earlier, a private survey showed,driven by a slew of policy easing measures by small- and medium-sized cities to stimulate demand.

** Real estate developers lost 0.7% on Friday, but jumped 8.2% for the week.

Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips

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