SHANGHAI, Aug 28 (Reuters) - China stocks rose on Monday after authorities announced a package of measures to boost investor confidence, but the market had erased most of the strong opening gains amid broader concerns about a stuttering economy.
China's blue-chip CSI 300 Index was up roughly 1% in afternoon trade, though quite a distance from the 5.5% jump at the market open. Hong Kong's Hang Seng Index advanced slightly more than 1% after opening up 3.1%.
Beijing introduced a slew of measures over the weekend to shore up the market, as part of several other economic support steps over the past few weeks.
The finance ministry said it was halving the stamp duty on stock trading. Reuters had reported on Friday that the government was considering the cut.
The measures also include slower pace of IPOs, further regulations on major shareholders' share reductions, and lower margin financing requirements.
"The policy package sent a clear signal to boost investor confidence as the market hit the bottom," said analysts at China Asset Management Co.
Shares rose in most sectors, with securities brokers climbing about 3%, after jumping 10% at open.
"A reduction in stamp duty would benefit securities brokers directly," said analysts at BOC International (China) Co, as trading activity could increase after the cut.
Real estate developers also advanced 4% amid the latest measures to aid the sluggish property markets, including relaxing residential housing loan rules and supporting affordable housing.
The package of measures come as China's stock benchmark dropped to nine-month lows earlier this month, erasing all gains made following the reopening from COVID curbs, as the economic recovery rapidly lost steam.
Beijing has taken a series of steps, including a smaller-than-expected cut in a key lending benchmark last week. But investors are demanding a stronger policy response including massive government spending.
FOREIGN SELLING
Despite the latest action to boost confidence, foreign investors offloaded a net 8 billion yuan ($1.10 billion) of Chinese stocks via the Stock Connect so far on Monday, having been net sellers in 14 out of 15 previous sessions.
Consumer staples companies slipped 0.4% after opening 4.2% higher, with liquor makers down roughly 0.5%.
"The market is well versed with the stamp duty cut and its effects. The sentiment boost from such a cut will be fleeting, but its policy intent should not be unheeded," said Hao Hong, chief economist at GROW Investment Group.
Ting Lu, chief China economist at Nomura, expected the policies' impact on market will be short lived if there are no more measures for supporting the real economy.
Underscoring the faltering recovery, latest economic data showed profits at China's industrial firms fell 6.7% in July from a year earlier, extending this year's slump to a seventh month.
"Without additional more aggressive policy stimulus, these stock markets-focused policies alone have little sustainable positive impact on stock markets, not to mention any positive impact on the economy," Nomura's Lu said.
"In the longer term, investors still have to focus on the changes in the country's economic fundamentals," said analysts at Western Securities. ($1 = 7.2871 Chinese yuan) (Reporting by Jason Xue in Shanghai and Tom Westbrook in Singapore; Editing by Shri Navaratnam and Lincoln Feast)
