Stocks in mainland China and Hong Kong advanced by the most since July before official reports showing recovery in the world’s second-largest economy gained stronger momentum last quarter. President Xi Jinping’s planned visit to Shenzhen also powered the rally.
The CSI300 index, which tracks the biggest companies on Shanghai and Shenzhen bourses, jumped 3 per cent to close at 4,823.16. It was its biggest rally in three months. The gauge rose 2 per cent on Friday after markets reopened for trading following the “golden week” holiday.
The Hang Seng Index closed 2.2 per cent higher at 24,649.68 on Monday, its best day since July 21. The index rallied 2.8 per cent last week.
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China is expected to report its export data for September on Tuesday, with consensus pointing to a 10.1 per cent gain from a year earlier, versus a 9.5 per cent increase in August, according to Nomura. The economy likely expanded 5.2 per cent in the third quarter, according to Nomura’s estimate, versus a 3.2 per cent rebound in the second quarter. The GDP report may come out as early as October 19.
“The short-term market sentiment suddenly turned optimistic,” said Alan Li, portfolio manager at Atta Capital. “Funds are increasing investment as they see the market rebounding so quickly today.”
Stocks perked up before President Xi Jinping’s planned visit to Shenzhen this week for a ceremony marking Shenzhen’s 40th anniversary as a special economic zone, according to an exclusive report by the South China Morning Post. Xi will deliver a speech on Wednesday, the official Xinhua News Agency confirmed the news and added.
The Shenzhen Composite Index surged 3.2 per cent. The city-listed largest liquor distiller Wuliangye Yibin jumped 5.1 per cent while carmaker BYD jumped 6.8 per cent rally. The ChiNext tech board surged 3.9 per cent. Hua Hong Semiconductor and Semiconductor Manufacturing International Corporation (SMIC) surged by more than 11 per cent in Hong Kong.
“Investors are looking forward to Xi’s speech in Shenzhen,” said Li. “No matter if it is to strengthen Shenzhen’s function in fundraising or tech innovation, it will benefit new economy stocks.” Traders are closely watching whether Xi will announce possible reforms to the stock market in Shenzhen and its impact on Hong Kong’s role as a major financial centre to bridge foreign investors and mainland China, he added.
The planned visit foreshadows China’s fifth plenum, which will chart the nation’s economic and political direction for the next five years. Beijing has announced at least four favourable policies to support Shenzhen’s growth, including establishing a fintech platform to promote a digital renminbi.
In Hong Kong, telecommunication and bank stocks were among the best gainers as investors bought the dip in recent days. China Unicom gained 7.4 per cent. Industrial and Commercial Bank of China rose 6.2 per cent, China Construction Bank added 6 per cent. The Hang Seng Tech Index of 30 top companies rose 3.3 per cent. Xiaomi surged 8.1 per cent.
Stock debutant Zhongyin Babi Food surged by the first-day cap of 44 per cent in Shanghai. Weihai City Commercial Bank produced no gain from its IPO price of HK$3.35 in Hong Kong.
Meanwhile, lenders in the Hong Kong could face more restrictions from the US as the Trump administration prepares to identify individuals or entities who contributed to the erosion in its autonomy. HSBC, the city’s leading lender, closed flat after dipping as much as 1 per cent.
Trump administration has a 90-day deadline, falling today, to issue a follow up report to the Hong Kong Autonomy Act passed in mid-July. HSBC and other lenders in the city could face new restrictions for engaging in “significant transactions” with sanctioned officials.
More from South China Morning Post:
- China’s stocks surge on economic recovery sign as bulls return from ‘golden week’ holiday, Hang Seng Index retreats on virus concerns
- US elections: As November 3 draws near, the case is building for global traders to buy Asia stocks over US equities
- How you should navigate Hong Kong, China stocks during an increasingly hostile Trump presidency
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