The Shanghai Composite index ended up 1.12% at 3,251.07 points, while the blue-chip CSI300 index rose 0.67% to 4,265.90.
Leading the gains, the real estate index gained 6.66%, buoyed by hopes authorities will loosen credit restrictions to spur home buying and ease a severe liquidity crunch facing the sector.
While China surprised markets by keeping its medium-term lending rate unchanged this week, investors have been expecting more easing moves, including possible cuts to banks’ reserve requirements.
Most analysts polled by Reuters expect China will keep its benchmark lending rates steady at its monthly fixing on Monday, though a few expected a small reduction in the five-year rate which influences the pricing of home mortgages.
“It will take some time for the market to recover energy from recent slumps, while investor sentiment has been boosted effectively,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co.
Already weak after a prolonged regulatory crackdown, China’s stock markets were pressured further over the past couple of weeks by a spike in COVID-19 cases and fears that its close ties with Russia will draw Western ire or sanctions.
Assurances of more support by the country’s economic czar Vice Premier Liu He and other policymaking bodies put a floor under markets on Wednesday, sending the CSI blue-chip index up more than 7% in three consecutive sessions, though it still ended the week 0.94% lower.
The Hang Seng index ended 4.18% higher for the week, the best performance in six weeks, despite shedding 0.41% on Friday. The Hang Seng China Enterprises index fell 0.56% to 7,366.42 on the day. The Hang Seng technology index, which had surged nearly 30% in previous two sessions on Liu’s comments, fell 1.92% on Friday as investors kept a wary eye on tensions between the United States and China.
U.S. President Joe Biden is expected to tell Chinese President Xi Jinping on Friday that Beijing will pay a price if it supports Russia’s military operations in Ukraine, a warning that comes at a time of deepening tensions between the nations.
“That is a broad set of topics which potentially covers trade, war and sanctions and could pave the way for tensions between U.S. and China to either thaw or intensify,” wrote Matt Simpson, an analyst at trading firm City Index.
At home, China is battling its largest COVID-19 outbreak in two years as the country reported 2,388 new local cases with confirmed symptoms on March 17, almost double the count a day earlier. A growing number of cities and regions are under some form of lockdown. (Reporting by Shanghai Newsroom; Editing by Rashmi Aich and Kim Coghill)
