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Shanghai shares up 1.28%, hitting a 3-month high
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SHANGHAI stocks jumped to a three-month high today, spurred by data showing China’s manufacturing industry may have expanded the fastest in 18 months and by optimism that the government will roll out more stimulus measures to bolster the economy.
The key Shanghai Composite Index rose 1.28 percent, or 26.57 points, to 2,105.06, the highest closing since April 16. Daily turnover reached 128.7 billion yuan (US$20.8 billion).
HSBC’s Flash China Purchasing Managers’ Index, the earliest indicator of China’s manufacturing activity in a month, rose to 52 in July, compared with the final reading of 50.7 in June, according to date released by HSBC Holdings PLC today.
A reading above 50 indicates the activity is expanding; a reading below 50 means it is contracting. The July reading was the highest since January 2013, thanks to a growth in output and new orders.
“Stimulus measures and recovering overseas markets helped the Chinese economy to pick up, as seen in rising demand, recovering output and more willingness to expand,” said Guan Qingyou, analyst of Minsheng Securities.
Nomura Securities said in a note that the government may loosen policy further in the third quarter to offset property market correction, manage credit risk, and lower financing costs for companies, especially for small and micro-sized enterprises in order to meet its 2014 growth target of 7.5 percent.
At a State Council meeting yesterday, Premier Li Keqiang vowed to provide more financing support to the real economy.
The People’s Bank of China today refrained from drawing liquidity from the market for a second time this week. That equals a cash injection of 18 billion yuan (US$2.9 billion). The move helped to ease concern over liquidity caused by new initial public offerings.
Financial shares led the market up. Industrial Bank leapt 5.5 percent to 10.24 yuan. CITIC Securities, China’s biggest broker by asset, gained 3.2 percent to 12.51 yuan. Sinolink Securities jumped 5.9 percent to 21.51 yuan.
Property developers also advanced after Shanghai Securities News reported that 27 cities have eased curbs on housing purchase. Poly Real Estate, China’s second-largest listed developer, soared 7.6 percent to 6.23 yuan.
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