Chinese stocks close at highest in almost a month as MSCI raises weighting, industrial profits data improves
- The Shanghai Composite Index climbed back above the 2,900 level for the first since August 1
- Hang Seng Index was slightly down, investors still concerned by growth outlook
Chinese stocks climbed on Tuesday, with the Shanghai Composite Index gaining 1.4 per cent to close at its highest level in almost a month.
Its gains contrasted with the Hang Seng Index, which ended virtually flat, as investors showed caution amid concerns about the city’s bleak growth outlook.
The benchmark Chinese gauge closed at 2,902.19, the highest since August 1. The CSI 300, which tracks blue chips listed in both Shanghai and Shenzhen, also rose 1.4 per cent, to finish at 3,816.95.
Profits at China’s large industrial firms recovered in July, posting year-on-year growth of 2.6 per cent, following a decline of 3.1 per cent in June. July’s growth was largely powered by the private sector, where industrial giants posted an 11.4 per cent rise in their profits.
The news provided investors with some respite from their concerns over the escalating US-China trade dispute.
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Meanwhile, stronger buying of Chinese stocks was also spurred by global index compiler MSCI, which implemented the second of three steps to raise the weighting of Chinese shares in its emerging markets indexes. It added eight Chinese stocks to the MSCI China Index, with an inclusion factor of 15 per cent.
“The A-share weighting increase by MSCI is positive to the overall market today,” said Kenny Tang Sing-hing, chief executive at Royton Securities, adding that he expects the Shanghai index to hover between 2,800 and 3,000 this week.
In Shanghai, China Life Insurance led the benchmark higher, climbing 2.9 per cent to 29.55 yuan, while 360 Securities rose by the 10 per cent daily limit to 20.46 yuan.
SAIC Motor gained 3.9 per cent to 24.96 yuan, while Industrial and Commercial Bank of China moved up 0.7 per cent to 5.42 yuan.
In Shenzhen, liquor distiller Wuliangye Yibin rose 3.9 per cent at 132.38 yuan. Muyuan Foodstuff rose 9.9 per cent to 78,32 yuan.
Such positive factors were absent in Hong Kong, where the Hang Seng Index finished almost flat at 25,664.07, wiping out small gains seen in the morning.
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“Investors remained cautious (given the Hong Kong growth outlook), and hence the blue chip index performance remained sluggish compared to Chinese benchmarks,” said Tang. “The Hang Seng will however still be supported by selective consumption and pharmaceutical stocks.”
Hong Kong has been mired for 12 weeks in a series of increasingly volatile protests sparked by the now –scrapped anti-extradition bill. Financial Secretary Paul Chan earlier this month warned of a possible recession that could emerge in the current quarter.
Weighing on the index today were China Mobile, down 1.5 per cent at HK$65.4 and the city’s bourse operator HKEX, which slid 0.8 per cent to close at HK$241.4.
But limiting further losses was WH Group, world’s biggest pork producer, which was the top percentage gainer, jumping 4.6 per cent to HK$6.42. It had suffered losses on Monday when it was sold off because it is likely to be in the latest batch of US China trade tariffs.
CSPC Pharmaceutical rose 3 per cent to HK$16.3; Sino Biopharmaceutical added 1.3 per cent at HK$11.
Anta Sports, China’s biggest sportwear maker by sales, rose 5.4 per cent to HK$64.55, a record high for the top gainer in the H share index, after Macquarie raised the target price to HK$82 from HK$69.
He expects the Hang Seng to continue to trade in the 25,000-2,6000 range, given the cautious market sentiment.
