By Jiaxing Li

Hong Kong (Reuters) – Chinese shares posted their first annual gain after an unprecedented three-year decline despite falling on the last trading day of 2024, while Hong Kong shares ended the year higher, helped by optimism over policy support.

The CSI 300 blue-chip index, tracking the largest companies listed on the Shanghai and Shenzhen stock exchanges, is up 14.7% this year, breaking a losing streak since 2021 that was sparked by the Covid-19 pandemic, problems in the real estate sector and tender confidence. consumers.

It gained 12.8% in 2024, ending a two-year decline. Hong Kong’s benchmark closed the last session of the year up 0.1%, an annual gain of 17.7% that ended four consecutive years of losses.

“In equity markets, China’s performance was a positive surprise for many investors,” Value Partners analysts wrote in a note this week.

“The various supportive measures announced in the second half of the year, targeting monetary policy, real estate and capital markets, far exceeded expectations and overshadowed ongoing economic concerns,” analysts said. Chinese authorities have implemented some of the boldest measures since September, including interest rate cuts, home-buying incentives and stock purchase financing programs, to shore up the struggling economy and restore domestic confidence.

Capital market stabilization has become a policy requirement and the general consensus is that the market is bottoming out, China Asset Management said in a note.

Bank stocks have surged 34.7% this year, with shares of the four largest state-owned banks hitting multi-year highs.

The chip sector rose 53.9% as domestic investors added stakes in local semiconductor makers amid tighter U.S. chip restrictions.

However, mainland stocks weakened on the last trading day of the year, with the CSI benchmark falling 1.6% after data showed factory activity in China grew at a slower pace in December amid rising trade risks.

After key meetings between Chinese leaders this month, the market is in the final phase of trading “based on political expectations,” Dai Qing, a strategist at Changjiang Securities, said in a note.

He added that looking ahead to 2025, dividend-paying stocks could continue to outperform the broader market in the brief term, especially when the January inauguration of U.S. President-elect Donald Trump could cause market disruption.