SHANGHAI, Oct 24 (Reuters) - China stocks edged up on Tuesday while Hong Kong shares dropped, as investor confidence remained weak even after state fund Central Huijin bought exchange-traded funds (ETFs) to bolster the flagging market.
China's blue-chip CSI 300 Index was flat by the lunch break, while the Shanghai Composite Index rose 0.4%. Hong Kong's Hang Seng Index lost 0.7%, hitting the lowest level in nearly 11 months.
The weakness comes amid China's economic sluggishness, higher U.S. yields and a global fragile sentiment on fears of the Israel-Hamas war escalating. However, "there has been some irrational over-correction, as investors shrugged off China's better-than-expected growth data," analysts at Nanjing Securities wrote in a note.
Central Huijin, which makes equity investments on behalf of China's central government, said it bought ETFs on Monday, and "will continue to increase holdings in future."
"There should be a rebound after the move," said Pang Xichun, research director at Nanjing RiskHunt Investment Management, but pointed out that investors still need to monitor foreign outflows.
Foreign investors sold a net 3.5 billion yuan ($479.33 million) of Chinese shares via Stock Connect by the midday break on Tuesday.
China's semiconductor stocks rebounded 3%, while the tech-focused STAR 50 Index gained roughly 1%. Small-caps, which touched 1-1/2-year lows on Monday, rebounded 1%. Bank stocks remained weak.
Yang Delong, chief economist at First Seafront Fund Management, said the market and the economy needed "stronger stimulus measures."
China is set to approve slightly more than 1 trillion yuan in additional sovereign debt issuance on Tuesday to help spur growth, three sources told Reuters.
Investors will also closely watch the Politburo meeting and the Central Economic Work Conference in December to gauge policy stance, Goldman Sachs said.
($1 = 7.3018 Chinese yuan) (Reporting by Shanghai Newsroom; Editing by Janane Venkatraman)
