Stocks in China and Hong Kong saw positive gains on Monday, driven by promising manufacturing data and growing expectations of continued policy support from Beijing. At midday, the Shanghai Composite index rose by 1.02%, reaching 3,360.38 points, extending its 1.4% gain from November. The CSI300 index, which tracks China’s top blue-chip stocks, also saw a 0.7% increase, bolstered by a 3.45% surge in the auto sector. Other sectors, including real estate and healthcare, added 1.51% and 0.75%, respectively. In Hong Kong, the Hang Seng Index climbed 0.23% to 19,468.27.
Investor sentiment was further boosted by encouraging data showing an expansion in China’s factory activity. This growth came as a result of the stimulus measures introduced by Beijing since September, coinciding with rising trade tensions under U.S. President-elect Donald Trump. The Caixin/S&P Global manufacturing PMI for November rose from 50.3 in October to 51.5, surpassing analysts’ expectations and marking the highest reading since June. This increase aligns with an official survey from earlier in the week, which reported a seven-month high in manufacturing activity.
Analysts at Citi noted that the economic momentum was improving, thanks to policy support and pre-emptive exports. They highlighted the importance of continued domestic policy support to counter any external challenges that might arise. Monetary and fiscal policies are expected to remain focused on supporting consumption.
In addition, Bank of America strategists observed that some long-term investors were adopting a more short-term approach, awaiting further policy direction from the Chinese government. The yield on China’s 10-year government bonds fell below 2%, hitting its lowest point since April 2002, reflecting expectations of continued monetary easing.
Meanwhile, the Chinese yuan came under pressure, weakening to a four-month low after Trump called on BRICS nations to stop supporting alternatives to the US dollar, threatening 100% tariffs if they did not comply.
The optimism in both the Chinese and Hong Kong stock markets highlights a period of resilience, largely attributed to government support measures and a more stable economic outlook, even amid growing external pressures.
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