Chinese stocks staged a sharp recovery in afternoon trading, with a spike in volumes for an exchange-traded fund tracking state-owned shares fueling speculation of buying by state funds.
The CSI 300 Index reversed all of its 1.6% loss to close 0.6% higher. The Hang Seng China Enterprises Index narrowed its decline after sliding almost 3% earlier.
The sudden rebound coincided with a jump in trading activity for the China Southern CSI Guoxin Central-SOEs Technology Lead exchange traded fund. Investors have been tracking the ETF for signs of state buying after China Reform Holdings Corp. said earlier this month that one of its units had bought an unspecified amount of an ETF tracking the index and planned to increase its holding in the future.
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