China stocks edged up on Friday, poised for a fourth straight week of gains, amid signs investors are pumping fresh money into a market buoyed by solid economic growth and a resurgent yuan.
With the yuan surging to a near 21-month high and taking centre stage again on Friday, investors who shrugged off China's August trade data pushed up sectors such as commodities, airlines and gold, betting they would benefit from the Chinese currency's bullishness, and dollar weakness, reports Reuters.
The CSI300 index rose 0.1 per cent, to 3,834.99 points by the lunch break, set to post a 4-week rising streak.
The Shanghai Composite Index gained 0.2 per cent, to 3,373.68 points.
"If history is any guide, yuan and Chinese equities are highly correlated," said Wu Kan, fund manager head of equities trading at Shanshan Finance.
"Yuan bullishness makes yuan-denominated assets more attractive, and lures money inflows...I believe we're already in a bull market."
Investors largely ignored August trade data showing China's exports rose 5.5 per cent from a year earlier, which were in line with expectations but slower than July, while imports grew 13.3 per cent, beating market forecasts.
A sign investors are seizing on the more optimistic outlook and taking on risk, outstanding margin financing – money investors borrowed to buy stocks - continued to climb, hitting 960 billion yuan ($148.8 billion), the highest level this year.
Meanwhile, data shows Chinese individuals are opening stock trading accounts at an accelerated pace, while foreign money inflow is also on the rise.
Traders said a weak dollar could help push up gold and commodity prices, benefiting miners.
The CSI300 materials subindex rose nearly 1 per cent, while major gold miners, including Zhongjin Gold and Hunan Gold also rose sharply.
Meanwhile, major carriers such as China Southern Airlines and China Eastern Airlines also climbed, as a strong yuan was seen benefitting airlines burdened with heavy debt denominated in dollars.
Hong Kong stocks followed Asian markets higher, as investors kept a wary eye on another U.S. storm, while the dollar skidded after European Central Bank chief Mario Draghi suggested the central bank may begin tapering its massive stimulus programme this autumn.
By midday, the Hang Seng index added 0.6 per cent, to 27,689.84 points, while the Hong Kong China Enterprises Index gained 0.5 per cent, to 11,158.27.