China, HK shares rise on auto, AI gains, Citi upgrade

Chinese and Hong Kong shares edged up on Wednesday, buoyed by regulatory support for the auto sector and renewed optimism in AI-related stocks, while Citi upgraded China equities citing improved earnings trends and structural growth themes.

** At the midday break, the Shanghai Composite index 000001 was up 0.1%, and China's blue-chip CSI300 index 3399300 was up 0.3%.

** Leading gains were AI-related shares 9930713 that added 1.2% and the info tech sector that jumped 1.4% 0000915 to a near four-month high, as news that Nvidia NVDA will ramp up supply of H20 chips to China continued to buoy sentiment.

** Auto stocks 9931008 edged up 0.6% after authorities pledged to regulate the excessive competition and intense price wars in the electric vehicle (EV) industry.

** In Hong Kong, the benchmark Hang Seng Index HSI edged up 0.1%, also lifted by auto HHSAMI and tech HHSTECH shares.

** Meanwhile, the biotech HHSHKBIO and healthcare sectors (.HSCIH) rallied more than 4% each.

** Analysts at Citi upgraded China equities to overweight, citing comparatively improved earnings outlook, reasonable valuations, and structural themes such as AI and corporate governance reforms.

** Internet names are among the top picks, as recent headlines about resumed sales of AI chips by US companies to China could be incrementally positive, wrote the analysts.

** "While the domestic economic picture remains mixed, a potential acceleration in support for domestic demand could be an upside catalyst," they said in a note on Thursday.