China stocks rebound on strong foreign inflows

China stocks rebounded on Thursday on strong foreign inflows, with overseas investors snapping up big-cap Chinese companies as policy expectations and the market's low valuation offered attractive opportunities.

The blue-chip CSI 300 Index jumped 1.9 per cent, set to log the biggest gain in five months and the Shanghai Composite Index added 1.1 per cent. Hong Kong's Hang Seng Index surged 1.5 per cent, and the Hang Seng China Enterprises Index climbed 1.8 per cent.

The broad Asian shares also touched five-month highs as market wagers on ever-more aggressive rate cuts extended a huge rally in US stocks and bonds, but also left plenty of scope for disappointment next year. Foreign investors bought a net 11.3 billion yuan ($1.59 billion) of Chinese stocks via the Stock Connect so far on the day, on course to book the biggest daily inflow in five months.

In mainland markets, new energy stocks jumped 6 per cent to lead the gains, while shares in real estate developers, consumer staples and tourism firms rose between 2 per cent and 3 per cent. "In the market, valuation and sentiment indicators are all at record low levels," said Huajin Securities in a note, adding there is limited room for further decline.

The broker said markets expected possible rate cuts early next year, while recent data showing double-digit gains in China's November industrial profits also helped sentiment. China will strive to expand domestic demand, ensure a speedy economic recovery and promote stable growth, according to an interim report on China's 14th five-year plan published by parliament on Wednesday.

Tech giants listed in Hong Kong gained 2.1 per cent, with Meituan up 4.3 per cent. The Hang Seng Mainland Properties Index advanced 3 per cent.