Mainland China stocks post best quarterly gain since 2015

Friday’s PMI data shows Chinese economy in good shape after hitting bottom in the last quarter of 2016, analysts say

PUBLISHED : Friday, 31 March, 2017, 10:48am
UPDATED : Friday, 31 March, 2017, 11:00pm

Shanghai stocks snapped a four day losing streak and headed higher on Friday, ending the first quarter with a 3.8 per cent gain, the best since the end of 2015.

Meanwhile, Hong Kong stocks were down at the close but still ended the first quarter on a strong note, having gained almost 10 per cent.

The mainland’s benchmark Shanghai Composite Index closed 0.4 per cent higher to 3,222 on the last trading day of March. So far, the index has advanced 3.8 per cent this year, and posted the biggest quarterly gain since the three months ended December 31, 2015.

The large-cap CSI300 rose 0.5 per cent to 3,456. The Shenzhen Composite Index and the ChiNext start-up board index gained 0.3 per cent and 0.7 per cent respectively to 1,986 and 1,907.

In Hong Kong, the benchmark Hang Seng Index ended the session down 0.8 per cent to 24,111. So far this quarter, it has jumped 10 per cent, reversing a 5.6 per cent decline in the fourth quarter of 2016.

The Chinese economy bottomed in the fourth quarter of 2016. After a prolonged recovery, the economy is in good shape now
Larry Hu, analyst, Macquarie Securities

The Hang Seng China Enterprises Index, known as the H-shares index, closed down 0.8 per cent to 10,273.1 on Friday.

Earlier in the day, data from the National Bureau of Statistics showed China’s manufacturing Purchasing Managers’ Index (PMI) increased to 51.8 in March from 51.6 the previous month, slightly higher than market expectations. It was the second straight monthly increase for the index.

“Looking back, the Chinese economy bottomed in the fourth quarter of 2016. After a prolonged recovery the economy is in good shape now,” said Larry Hu, an analyst for Macquarie Securities.

“During this earnings season banks reported that bad loans have stabilised.”

However, he also said the first quarter of 2017 could see the peak growth of nominal GDP and corporate earnings, as producer price momentum started to moderate in March.

Investors also digested a mixed bag of corporate earnings.

In Hong Kong, Wynn Macau closed 2.9 per cent down to HK$15.82 after the casino operator said its net profit slid 40 per cent last year. PetroChina lost 1.2 per cent to HK$5.69 at the close after recording a 78 per cent drop in annual earnings. Bank of China, which is due to report its annual results later Friday, fell 1.0 per cent to HK$3.86.

ICBC reversed earlier gains in the morning and closed the session 0.8 per cent lower to HK$5.08,

after posting a 0.4 per cent increase in net income for 2016.

Among newly listed stocks, Chanhigh Holdings, a contractor for municipal construction work in Hong Kong, rose as much as 12 per cent on its trading debut, up to HK$2.42 from an IPO price of HK$2.17.

However, Luzhou Xinglu Water Group, a provider of water systems and distribution services, ended lower after earlier gains on its Hong Kong debut, falling 1.3 per cent to HK$2.27 from an IPO price of HK$2.30.

On the Chinese mainland, engineering firm Guangdong Daan Project Management jumped by its 44 per cent allowable limit in Shenzhen, rising to 17.84 yuan from an IPO price of 12.39 yuan.

Jiangxi Synergy Pharmaceutical also shot up by 44 per cent to 20.84 yuan from an IPO price of 14.47 yuan.

Overnight in the US, stocks closed higher after gross domestic product growth was revised up to 2.1 per cent in the fourth quarter. The Dow Jones Industrial Average ended up 0.3 per cent at 20,728.49. The S&P 500 index also rose 0.3 per cent to 2,368.06, boosted by the financial and industrial sectors. The Nasdaq Composite Index finished higher by 0.3 per cent to close at a record 5,914.34.

Mainland Chinese markets will be closed on Monday and Tuesday for public holidays.