China Stocks Edge Higher on Policy Support Pledge; Hong Kong Slips

Chinese stocks edged up in Tuesday trading after the country's cabinet vowed to increase policy support to counter growing economic pressures, though gains were limited by thin volume ahead of a major holiday. In contrast, Hong Kong's benchmark index fell.

By the midday break, China's blue-chip CSI300 Index was nearly flat, while the Shanghai Composite Index had gained 0.1%. Hong Kong's Hang Seng Index declined by 0.6%, according to a Reuters report.

Property Sector Lifts Onshore Markets

The primary driver for the gains in mainland China was a pledge from the State Council to roll out measures aimed at stabilizing the nation's troubled property market. This sparked a rally in real estate developers, with shares in industry giant Vanke surging nearly 8%.

Analysts at Goldman Sachs said in a note that they anticipate further policy action. They expect "more large cities to introduce local housing easing measures" and a broader use of housing provident funds to help lower average mortgage rates.

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Muted Sentiment Amid Headwinds

Despite the policy news, overall market sentiment remained cautious. Analysts at Northeast Securities pointed to rising U.S. Treasury yields and insufficient liquidity as significant headwinds. Trading activity was light as investors prepared for China's week-long National Day holiday, which begins on Thursday. Onshore markets are set to resume trading on October 8.

Other sectors showed mixed performance. In mainland China, sentiment around AI-related stocks saw a slight rebound, with the 5G Communication Index up 0.8% and the tech-heavy STAR50 Index rising 0.6%. In Hong Kong, however, major technology stocks fell 1.4%, while the Hang Seng Innovative Drug Index bucked the trend, rising 3.3%.