(Bloomberg) -- China’s stocks rallied for a third day as investors continued to cheer policymakers’ efforts to shore up the economy, with data showing a moderation in factory inflation providing more room for easing.

The benchmark CSI 300 Index was up 1.8% at the mid-day close on Thursday, taking its three-day advance to almost 4%. Consumer discretionary and technology sectors were the top performers. Hong Kong’s Hang Seng Index was up almost 1%.

Recent gains have come after the central bank’s announcement Monday of a cut to the reserve requirement ratio was seen as a policy shift. The same day, the Communist Party’s Politburo signaled an easing in curbs on the real estate industry. The steps helped restore investor confidence after the CSI gauge in November capped its worst monthly loss since July. 

“The latest RRR cut should benefit A-shares more than other markets as they are more sensitive to domestic liquidity conditions,” said Marvin Chen, a strategist at Bloomberg Intelligence, adding that this second cut following a similar move in July should support the onshore market into early 2022.

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China’s factory inflation slowed in November from a 26-year high, data showed on Thursday. The consumer price index increased 2.3%, the fastest pace since August 2020 but below the projected 2.5% gain.

While elevated inflation may linger into early 2022 before base effects kick in, passthrough to China consumers still remains limited, which could allow for further policy easing in the first half of next year, said Chen.

Distillers Kweichow Moutai Co. and Wuliangye Yibin Co. provided the biggest boost to the CSI gauge on Thursday.

Overseas investors piled in to snap up 13.6 billion yuan ($2.1 billion) worth of onshore shares Thursday, on course for the most since June, with total inflows this week crossing 30 billion yuan, according to Bloomberg-compiled data.

“Moving into 2022, there is room for China stocks to play catch-up, considering that they have been lagging in terms of performance this year,” said Jun Rong Yeap, a strategist at IG Asia Pte. “Accommodative policies may also provide a positive backdrop for growth, but the property sector will remain a key risk to watch.”

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