China’s stocks rise most in month ahead of joining MSCI benchmarks, growth prospects
Fund managers buy US$1 billion of mainland equities through the stock connect schemes on Thursday, the most since April 18
China’s stocks rose the most in a month on Thursday, as global investors loaded up on yuan-traded equities ahead of the shares officially joining the MSCI benchmarks and positive manufacturing industry data bolstered optimism on the economic outlook.
The Shanghai Composite Index climbed 1.8 per cent, or 54.03 points, to 3,095.47 at the close, the biggest gain since April 24. The gain, the first in seven days, also helped the gauge to end May in positive territory with a monthly advance of 0.4 per cent. The CSI 300 Index of bigger companies jumped 2.1 per cent and the ChiNext gauge of small-caps added 1 per cent. Hong Kong’s Hang Seng Index also climbed as concerns about the political impasse in Italy eased.
The mainland’s equities almost recouped losses from a sell-off that sent the Shanghai Composite slumping by 2.5 per cent on Wednesday, as overseas investors boosted buying to mimic the change of constituents on the MSCI Emerging Markets Index that will include 234 mainland-traded stocks for the first time on June 1.
The official manufacturing Purchasing Managers’ Index for May, which showed the manufacturing industry expanding at the fastest pace since September, also lifted the mood.
“It’s an important window of time for China’s stocks and it looks like that inflows into heavyweights are swelling because of the MSCI inclusion,” said Wu Kan, a fund manager at Shanshan Finance in Shanghai. “The macroeconomy is in good shape and the economic data tells investors that they don’t need to worry too much about the recent wave of corporate bond defaults. The risk is generally controllable.”
Overseas investors bought a net 6.63 billion yuan (US$1.04 billion) of mainland equities through the link schemes with the Hong Kong exchange on Thursday, the most since April 18.