UpdateChinese markets to settle higher as turnover thins out in holiday week

Chinese markets clawed their way back up at the close on Monday, shrugging off weaker-than-expected industrial profitability data in a week that will be shortened by a number of holidays in Hong Kong and on the mainland.

The benchmark Shanghai Composite Index recouped earlier losses and settled 0.27 percent higher at 3,100.76. The small-and-mid-cap-heavy Shenzhen Composite Index advanced 2.4 percent to finish at 1,737.92. Meanwhile, the large-cap CSI300 index rose 0.33 percent to 3,242.75, while the Nasdaq-style ChiNext Index rallied 5.01 per cent to 2,122.26.

Turnover for Shanghai dropped sharply to 166.4 billion yuan compared with Friday last week, which stood at 248.97 billion yuan. Meanwhile, the turnover for the ChiNext Index also shrank to 79.92 billion yuan, compared with 85.92 billion yuan in the previous session.

Mainland industrial enterprises reported aggregate profits plunged 8.8 per cent to 448.1 billion yuan in August from the same period last year, battered by lower selling prices and investments and higher costs, the National Bureau of Statistics said on Monday morning.

Petroleum, automobile and chemical sectors recorded the biggest declines in profits.

“After a poor star of the day, impacted by the disappointing industrial profit figures, the market gradually recovered driven by the strong performance of IT stocks, which later spread to several other sectors,” said Gerry Alfonso, a director at Shanghai-based Shenwan Hongyuan Securities.

He added that the IT stocks received some support from the official visit of President Xi Jinping to the US, as investors considered the trip as a sign of further economic collaboration, particularly in the technology sector.