China Stocks Climb Amid U.S. Rate Cut and Stimulus Bets

China stocks closed higher on Friday, marking their first weekly gain in a month, driven by expectations of incoming stimulus following the U.S. rate cut. Hong Kong shares rose significantly, recording their best week in five months. Real estate and tech sectors in China benefited from the lower rates, while banking shares also saw gains.

China stocks closed higher on Friday, logging their first weekly gain in a month, as the jumbo U.S. rate cut strengthened bets Beijing will soon unveil fresh stimulus.

Hong Kong shares rose for the fifth day, posting the best week in five months, amid a broad rally in global equities. China's blue-chip CSI300 index reversed early losses to end the session up 0.2%, while the Shanghai Composite index also closed higher. Both indexes posted rare weekly gains - only the fourth in 19 weeks.

Hong Kong's Hang Seng Index rose 1.4%, bringing its weekly gain to 5.1%, as the Federal Reserve kicked off its rate-cutting cycle on Wednesday with a bigger-than-expected 50-basis-point cut. Hong Kong stocks are more sensitive to U.S. rates than shares in China, where regulators impose strict capital controls.

In China, sectors that benefit from lower rates - including real estate and tech - rose. Banking shares also gained on China's Friday inaction on benchmark loan rates. Lower lending rates hurt banks' profitability. The Fed starting to cut rates is good news for Chinese assets, but whether the A-share market can stabilise is mainly determined by economic fundamentals, China International Capital Corp cautioned in a note.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.62%, while Japan's Nikkei index closed up 1.53%. China's CSI financial sector sub-index was higher by 0.48%, the consumer staples sector down 0.1%, the real estate index up 1.37% and the healthcare sub-index down 1.14%.

The smaller Shenzhen index ended down 0.16% and the start-up board ChiNext Composite index was weaker by 0.639%. In Hong Kong, the sub-index of the Hang Seng tracking energy shares rose 1.3%, while the IT sector rose 0.37%, the financial sector ended 1.27% higher and the property sector rose 1.72%.

(With inputs from agencies.)