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  • Writer's pictureThe San Juan Daily Star

US-listed China stocks bounce off lows on hopes of Beijing support

New York-listed shares of Chinese companies bounced back on Tuesday after a dour start to the year, after a report of a rescue package for the slumping domestic stock market buoyed sentiment.

The Nasdaq Golden Dragon China Index - a gauge of Chinese American depositary receipts (ADRs) - jumped 5.8% after hitting its lowest level since Nov. 2021 in the previous session and much higher than the tech-heavy Nasdaq Composite’s 0.3% rise.

Policymakers in Beijing are looking to mobilize about 2 trillion yuan ($278.53 billion) in an effort to stabilize a bruised stock market, Bloomberg News reported on Tuesday citing people familiar with the matter.

ADRs of heavyweights, Baidu, NetEase and PDD HOldings rose between 6% and 7.5%.

Chinese domestic stocks rose from multi-year lows earlier in the day on hopes of the rescue package and Beijing’s pledge to stabilize market confidence.

“Investors are cheering the stimulus plan... (however) today’s news may not be enough to turn the tide for Chinese equities,” said Charalampos Pissouros, analyst at Cyprus-based forex brokerage XM.

The bluechip CSI300 Index is still near five-year lows. Hong Kong’s Hang Seng is hovering near 14-month lows following the country’s disappointing post-pandemic economic recovery and underwhelming stimulus measures to support the battered property sector.

The iShares MSCI China ETF added nearly 4% on Tuesday. The $4.96 billion fund has seen about $300 million in outflows so far this month, extending losses from a record annual drop in capital flows of $848 million in 2023, according to LSEG data.

Alibaba jumped 7.6% after a report co-founder Jack Ma and Chairman Joe Tsai bought millions worth of shares in the Chinese e-commerce giant in the fourth quarter.

Hedge funds bought more U.S. stocks than they sold last week for the first time in ten weeks, adding $554 million to their portfolios, Bank of America said in a note about its clients’ flows.

The hedge funds’ net purchases occurred in a week when the S&P 500 index posted a record high close on Friday for the first time in two years, amid a rally in chipmakers and mega-cap technology stocks.

Still, hedge funds are net sellers of roughly $2 billion in shares on a year-to-date basis, BofA said.

Last week, hedge funds bought mainly exchange-traded funds (ETFs), adding over $200 million of those securities, and large-cap companies. Energy and healthcare were the two top sectors for hedge funds’ acquisitions last week.

Overall, BofA said it saw the biggest inflow into U.S. equities since mid-December when all of its clients, including hedge funds, institutional and retail investors, and companies, were factored in.

-The S&P 500 rose marginally on Tuesday as investors digested a mixed bag of early quarterly results and awaited a slew of additional reports from Netflix, Tesla and other companies later this week.

The S&P 500 is trading near record highs, and many investors view upcoming quarterly reports from the heavily weighted “Magnificent 7” group of megacap companies as key to whether Wall Street’s recent rally continues or loses steam.

“It’s a crescendo of reports tomorrow and Thursday, and then next week will be even busier,” said Art Hogan, chief market strategist at B. Riley Wealth. “We’ve got a lot of things to contemplate over the course of this week and next that will likely will end up being a market positive.”

3M tumbled more than 11% after forecasting dour annual earnings, while Johnson & Johnson dipped 1.3% after reporting quarterly results just above expectations.

D.R. Horton dropped almost 10% after the homebuilder missed estimates for first-quarter profit.

Verizon Communications rallied 5.7% after forecasting a strong annual profit and posting its highest quarterly subscriber additions in nearly two years, while Procter & Gamble gained 4.5% after it topped second-quarter profit expectations.

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