Shanghai recovers some ground as pressure lingers over G20 trade talks and bleak PMI report
- The Shanghai Composite Index rose 0.8 per cent on Friday, paring its loss in November to 0.6 per cent
- The Hang Seng Index added 0.2 per cent, capping a 6.1 per cent gain for the month
Mainland China stocks rebounded on Friday, trimming a monthly loss, as bargain hunting in consumer companies, the worst-performing industry for the quarter, offset uncertainty over the outlook of the meeting between President Xi Jinping and US President Donald Trump and over data showing a slowdown in manufacturing activity.
The Shanghai Composite Index rose 0.8 per cent, or 20.75 points, to 2,588.19, paring its loss in November to 0.6 per cent.
A gauge of consumer staples stocks in the mainland advanced 2.4 per cent for the biggest gain among the 10 industry groups of the CSI 300 Index. The sector had tumbled 19 per cent this quarter until Thursday.
Liquor maker Shanxi Xinghuacun Fen Wine Factory jumped 6.4 per cent to 35.85 yuan (HK$40.38) and pig-farming company Muyuan Foodstuff rose 5.2 per cent to 27.01 yuan. Wuliangye Yibin rose 3.9 per cent to 52.39 yuan.
“There are some bargain hunting activities in the market, which has boosted sentiment,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “But the downside pressure on the market is still there, with the trade war and weak economic fundamentals.”
The outcome of the Xi-Trump talks was the biggest uncertain factor in the markets.
While JPMorgan Asset Management said earlier in the week the talks might yield progress towards a trade deal, Goldman Sachs argued the trade tension between the two would remain unresolved, with the most likely outcome a continued escalation of the trade war where “tariff rates rise to 25 per cent on all imports currently under tariff, and tariffs are extended to remaining Chinese imports [to the US]”.
Goldman analysts added that the assets most sensitive to the deepening trade conflict are the yuan and Chinese equities.
Meanwhile, concerns about the mainland economy lingered after the latest official purchasing managers’ index showed manufacturing activity fell close to contraction this month.
A gauge of consumer staples stocks in the mainland advanced 2.4 per cent for the biggest gain among the 10 industry groups of the CSI 300 Index. Liquor maker Shanxi Xinghuacun jumped 6.4 per cent to 35.85 yuan and pig-farming company Muyuan Foodstuff surged 5.2 per cent to 27.01 yuan. Wuliangye Yibin rose 3.9 per cent to 52.39 yuan.
In Hong Kong, the Hang Seng Index gained 0.2 per cent, or 55.72 points, to 26,506.75, bringing gains for the month to 6.1 per cent.
China Evergrande Group rallied 8.6 per cent to HK$24.65 after the property developer was reported to have raised HK$12 billion (US$1.53 billion) in loans and notes to refinance a mortgage debt that backed its purchase of an office tower in the city.
Meitu, the selfie app, shed 4.1 per cent to HK$3.25, extending a 16 per cent slump a day earlier. The China Consumers Association said 91 of 100 mobile apps it tested may be collecting too much user data. Meitu is suspected of obtaining an excessive amount of biometric and financial information, it said.