China’s stock market experienced a notable rise on Monday following a private sector survey revealing that the country’s manufacturing activity expanded at its fastest rate in over three years. Meanwhile, the Hong Kong market remained closed due to a holiday, and broader Asian stocks were subdued as traders considered the outlook for U.S. interest rates.
Yields on China’s 10-year and 30-year treasuries increased after the central bank announced plans to borrow treasury bonds from some primary dealers in open market operations. This move, perceived by traders and analysts, aims to stabilise falling yields.
The Caixin/S&P Global manufacturing PMI climbed to 51.8 in June, up from 51.7 in May. This represents the fastest growth since May 2021, surpassing analysts’ expectations of 51.2 and suggesting that the sector remains robust. However, this contrasted with an official PMI released on Sunday, indicating a decline in manufacturing activity, which has sustained calls for further stimulus as the economy struggles to regain momentum.
New home prices in China increased at their slowest rate in five months in June, according to a private survey released on Monday. A recent major government support package for the country’s struggling property sector has had limited impact so far.
By the close, the Shanghai Composite index was up 0.92% at 2,994.73. The blue-chip CSI300 index rose by 0.48%, with its financial sector sub-index up 1.04%, the consumer staples sector down 0.57%, the real estate index up 5.76%, and the healthcare sub-index barely changed, increasing by 0.01%. The smaller Shenzhen index ended up 0.77%, while the start-up board ChiNext Composite index remained unchanged.
In the region, MSCI’s Asia ex-Japan stock index increased by 0.05%, and Japan’s Nikkei index closed up by 0.12%.
Final Thoughts
The surge in China’s stock market highlights the positive impact of the manufacturing sector’s robust performance, though challenges remain in other areas such as the property market. Investors continue to monitor economic indicators and government measures closely.
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