The Shanghai Composite Index added 0.32 per cent, or a meagre 10.90 points, to close at 3,456.31, with the CSI 300 up 0.71 per cent, or 25.28 points, to 3,591.70. The Shenzhen Composite Index shed 0.24 per cent, or 5.32 points, to 2,198.28. The Nasdaq-style ChiNext fell 0.64 per cent, 17.24 points, to 2,655.35.

Louis Tse Ming-Kwong, a Director at VC Brokerage, said the Hong Kong market seemed to take inspiration from news of the International Monetary Fund’s decision to add the yuan to its Special Drawing Rights reserve currency basket from October 2016, making it the fifth currency to join the pool alongside the US dollar, euro, Japanese yen and British pound.

“Although it is well expected, it is still positive news and will provide an excuse for traders to buy in the market and to wind up their short selling positions,” Tse said.

With the IMF decision out of the way, market players will soon turn their focus to the US Fed, which is widely expected to raise interest rates at its December 15-16 meeting in Washington for the first time in almost a decade.

Analysts with Shenyin Wanguo in Shanghai said in a note on Tuesday that China’s joining the SDR had limited impact over the domestic equity market in the short term.

However, it says, “the underwriting by the IMF” will benefit China’s stock market longer term if the MSCI includes the A-share into its widely followed and influential emerging market index.

Morgan Stanley said in their Tuesday note that the reforms China has undertaken “could help on issues like market access and liquidity,” although it said the timeline for A-share inclusion into the MSCI benchmark is unchanged.

“We continue to expect partial inclusion with a low initial inclusion factor - of say 5 per cent - by May 2017, on which basis China A-share would make up 1 per cent of the MSCI EM Index at that point.”

The Caixin China General Manufacturing PMI - a composite indicator tracking conditions in the manufacturing economy – printed at 48.6 in November, up slightly from 48.3 in October, marking its first improvement in six months. The gauge however remains below the 50 level, which separates expansion from contraction.

On the other hand, the official manufacturing purchasing managers index, released 45 minutes earlier than the Caixin survey results, actually showed conditions deteriorating, as it came in at 49.6 - slightly lower than October’s 49.8, according to data released by the official National Bureau of Statistics.

Property companies led the charge on Tuesday, as investors speculated Beijing will introduce further stimulus measures including tax preferences, to support the industry.

China Vanke hit the daily limit up by 10.02 per cent in Shenzhen to close at 16.58 yuan. Its H-share also shot up by 7.14 per cent to HK$20.70.

Insurance and oil stocks led the advance in the Hong Kong market. AIA grew 3.13 per cent and finished at HK$47.75. Huaneng Power rose 3.99 per cent to finish at HK$7.03.

After the market closed, the City Football Group announced China’s media giant CMC Holdings and CITIC Capital were to invest US$400 million to take a shareholding of just over 13 per cent in the football group. The deal values the group at US$3 billion.

The onshore yuan continued to hover at a three-month low and closed at 6.3987 against the US dollar, weaker by 0.01 per cent from the previous close. The offshore yuan was trading late on Tuesday at 6.4435 to the greenback.

The People’s Bank of China set the yuan mid-point fix at 6.3973 against the US dollar, weaker by 11 basis points and marking the eighth day in a row it was set lower by the central bank.

The American Depository Receipts of big Hong Kong and Chinese companies were up slightly in overnight trading. HSBC’s ADR closed at HK$61.88, up 8 Hong Kong cents from it prior close in Hong Kong, while Tencent’s ADR ended at HK$154.66, up 36 Hong Kong cents. China Mobile’s ADR closed at HK$89.11, up HK$1.01 from its Hong Kong close.