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

HONG KONG, July 17 (Reuters) - 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 .SSEC was up 0.1%, and China's blue-chip CSI300 index .CSI300 was up 0.3%.

Leading gains were AI-related shares .CSI930713 that added 1.2% and the info tech sector that jumped 1.4% .CSIINT to a near four-month high, as news that Nvidia NVDA.O will ramp up supply of H20 chips to China continued to buoy sentiment.

Auto stocks .CSI931008 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 .HSAMI and tech .HSTECH shares.

Meanwhile, the biotech .HSHKBIO 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.