By recent standards it has been a uneventful session for Chinese stocks so far

Photo: Getty / File

Chinese stocks are modestly lower on Thursday, having recovered from another large plunge in early trade.

At the mid-session break the benchmark Shanghai Composite index has fallen 0.4%, a far smaller decline than the 2.23% drop seen earlier in the session.

Keeping with yesterday’s theme, telecommunications are the leading sector – up 4.70% – with energy – down 1.47% – the session laggard.

Like Wednesday, it’s small-cap stocks that are outperforming their larger peers.

The Shenzhen Composite, CSI 500 and tech-heavy ChiNext indices – brimming with small-cap stocks – are higher by between 0.25% to 1.33%.

Elsewhere the SSE 50 and CSI 300 – containing large-cap stocks – are off by 0.69% and 0.36% respectively.

While there has been no specific reason to explain the sharp turnaround in stocks, it’s safe to assume that it likely involved more central bank sponsored buying by various state-backed financial firms.

On Wednesday Central Huijin Investment Limited, a Chinese state-backed subsidiary of the China Investment Corporation, used more than 20 billion yuan ($3.125 billion) to increase its stake in Chinese banks, along with an insurer.

China Investment Corporation is the nation’s sovereign fund.

While there has been no subsequent follow up announcement on whether this state-backed buying has continued, having seen this move into the market yesterday, it’s likely that many investors are speculating that it is.

Trade in Chinese stocks will resume at 3.00pm AEST.

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