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August 4, 2020

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Stocks soar amid data optimism

By Tracy Li | 00:00 UTC+8 August 4, 2020 | Print Edition

Chinese stock markets closed higher yesterday as upbeat economic data raised investor optimism.

The benchmark Shanghai Composite Index rose 1.75 percent to close at 3,367.97 points, following gains by national defense companies.

The smaller Shenzhen Component Index jumped 2.4 percent to finish at 13,964.56, while the ChiNext Index rose 2.63 percent to 2,868.88.

The combined turnover on the two bourses came to 1.33 trillion yuan (US$143 billion), compared with 1.14 trillion yuan in the previous session.

The national defense sector led the gains, with over 40 companies seeing their shares jump by the daily limit.

Automakers, computers and electronics firms were among the top gainers.

A private survey released yesterday showed that China’s manufacturing activity had expanded in July.

The Caixin/Markit manufacturing Purchasing Manager’s Index was at 52.8 for July, 1.6 percentage points higher than June and the highest since February in 2011.

A reading above 50 signifies expansion, with contraction below that figure.

China’s macro policy is shifting from emergency mode to the usual countercyclical stance as the economy has bottomed out, a report by ANZ Bank said.

The Politburo post-meeting statement last week should be interpreted as a policy normalization move rather than policy exit, ANZ added, saying that it believes a reserve requirement ratio or interest rate cut targeting small banks or financial inclusion remains on the table as the COVID-19-specific relending scheme is gradually phased out.

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