Strong manufacturing data fuels surge
Print Edition
SHANGHAI stocks rose to a three-month high yesterday, buoyed by an upbeat data on the manufacturing sector which expanded at the fastest pace in 18 months. Optimism that the government would roll out more stimulus to bolster economic growth also gave a boost to the market.
The key Shanghai Composite Index gained 1.28 percent, or 26.57 points, to 2,105.06, the highest closing since April 16.
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 final reading of 50.7 in June, according to date released by HSBC Holdings Plc yesterday. A reading above 50 indicates expansion.
The July reading was the highest since January 2013.
“Stimulus measures and recovering global economy helped the Chinese economy to pick up as can be seen from growing demands, recovering output and a willingness to expand,” said Guan Qingyou, analyst at Minsheng Securities.
Nomura Securities said in a note yesterday that “the government is expected to loosen the policy further in the third quarter to offset the ongoing property market correction, manage credit risk, and lower financing costs for firms, especially for small and micro-sized enterprises” in order to meet its 2014 growth target of 7.5 percent.
During an executive meeting of the State Council on Wednesday, Premier Li Keqiang vowed to offer more financing support to the real economy.
The People’s Bank of China yesterday refrained from drawing liquidity from the money market for a second time this week. That equals a net cash injection of 18 billion yuan (US$2.9 billion). The move helps to ease concern over liquidity when nine initial public offerings are taking subscriptions.
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.
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