Shanghai stocks rise on ETF Connect boost, COVID woes cap gains

SHANGHAI, July 4 (Reuters)Chinese stocks edged higher on Monday, buoyed by the new ETF Connect cross-border investment program, but gains were capped by signs of rising COVID-19 infections.

In Hong Kong, stocks fell as airline stocks weighed on major indexes.

** CSI300 Prime Chinese Index .CSI300 rose 0.2% at the lunch break, while the Shanghai Composite Index .SSEC gained 0.1%. In Hong Kong, the benchmark Hang Seng index fell 0.6%.

** Investors in China and Hong Kong began trading exchange-traded funds (ETFs) in each other’s markets on Monday, but more money is likely to flow to mainland markets initially as part of ETF Connect .

** With only four Hong Kong-listed ETFs qualifying – compared to 83 eligible products traded in Shanghai and Shenzhen – the benefits are heavily skewed towards funds that invest in China-listed stocks.

**But risk appetite in China has been dampened by signs of a possible resurgence in COVID-19 outbreaks.

**Parts of eastern China are holding new rounds of mass COVID-19 testing, as the country faces fresh waves of infections while recovering from the impact of spring outbreaks that have hit Beijing and Shanghai.

** The daily number of locally transmitted infections in mainland China rose to more than 300 over the weekend, against a few dozen at the end of June.

**An index that tracks Chinese healthcare stocks .CSIHCSI jumped nearly 4%, but tourism .CSI930633 and transport stocks .CSI000957 shares fell sharply.

** ChinaThe three major state-owned airlines fell in China and Hong Kong, after pledging on Friday to buy a total of nearly 300 Airbuses AIR.PA jets, the largest order from Chinese carriers since the start of the pandemic.

** Hong Kong shares of Air China 0753.HK601111.SS fell 7.5% in the lunch break, on track for its worst day since March.

** China Southern Airlines shares 1055.HK600029.SS and China Eastern Airlines 600115.SS, 0670.HK also dropped sharply.

(Reporting by Shanghai Newsroom; Editing by Uttaresh.V)

(([email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Garland K. Long