China stocks hold near fresh decade high; Hong Kong slips after rally

SHANGHAI, Jan 7 (Reuters) - China stocks were mixed on Wednesday but remained near their highest levels in more than 10 years, supported by stronger trading volumes and expectations of corporate profit growth, while Hong Kong shares pulled back after a three-day rally.

China's blue-chip CSI300 Index .CSI300 ended 0.3% down, while the Shanghai Composite Index .SSEC gained 0.1%. Hong Kong's benchmark Hang Seng .HSI was down 0.9%.

Onshore turnover has picked up since the start of the New Year, reaching 2.8 trillion yuan ($404.79 billion) on Wednesday, the highest since September 18, 2025.

The Shanghai Composite Index crossed the key 4,000-point threshold this week, logging its highest level since July 2015.

Goldman Sachs analysts expect MSCI China .MSCICHINA and the CSI300 .CSI300 to rise 20% and 12%, respectively, in 2026, driven almost entirely by earnings growth.

The bank expects corporate profits to accelerate from 4% in 2025 to 14% in both 2026 and 2027, underpinned by advances in artificial intelligence, Chinese firms' "Going Global" strategy and domestic policies aimed at curbing "involution".

Adding to the positive backdrop, China's central bank said on Tuesday it will cut the reserve requirement ratio and interest rates in 2026 to keep liquidity ample and continue to implement appropriately loose monetary policy.

Semiconductor shares rose .CSIH30184 rose 2.4%, leading gains onshore.

Hong Kong tech shares .HSTECH weighed on the market, falling 1.5% as Alibaba 9988.HK slid 3.3%. Meanwhile, innovative drug shares .HSSSHID extended their rally, up 3.2%.

Investors are awaiting China's inflation data, due on Friday, for clues on whether domestic demand is strengthening.

($1 = 6.9912 Chinese yuan renminbi)