China’s stocks edged up, extending the gain from the biggest rally in three months, as investors assessed the strength of the nation’s economic recovery and the prospect of more US stimulus packages. Hong Kong cancelled trading in stocks and derivatives due to a typhoon warning.
The Shanghai Composite Index added less than 0.1 per cent to 3,359.75, as a late rally lifted stocks out of earlier losses. The momentum remained intact after a 2.7 per cent gain on Monday, spurred by optimism President Xi Jinping will unveil further reform measures in his trip to Shenzhen to mark the 40th anniversary of the special economic zone bordering Hong Kong.
Strong buying over the past two trading days helped lift the combined value of the companies listed on the Shanghai and Shenzhen exchanges beyond the US$10 trillion mark on Monday for the first time since 2015. That ranked it the world’s second-largest equity market after the United States.
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Other markets in Asia were mixed on Monday as the US made no progress on ending the stalemate of a new round of stimulus measures. Members of the House were told not to expect any action this week and many Senate Republicans rejected the White House proposal for a deal.
Meantime, the Johnson & Johnson halted its clinical trial of the vaccine for Covid-19 due to an unexplained illness in an experimental patient.
China’s exports grew by faster-than-expected 8.7 per cent, while imports increased 12 per cent, beating the estimate of 1 per cent growth. Other economic data in the coming week will provide more clues on the sustainability of China’s recovery from the damage caused by the pandemic. Third-quarter economic growth, of which consensus signals a faster recovery, is due on October 19.
“China’s economy will continue the recovery,” said Min Liangchao, a strategist at HSBC Jintrust Fund Management in Shanghai. “Growth in industrial production is expected to stabilise and consumption of the service industry is likely to improve further.”
Pharmaceutical companies were among the best-performing sectors after the outbreak of new coronavirus cases in the east city of Qingdao, while technology and financial stocks were the biggest decliners among the industry groups.
Guolian Securities tumbled 5.9 per cent to 18.48 yuan in Shanghai after terminating a plan to acquire bigger rival Sinolink Securities. Sinolink advanced 2.9 per cent to 15.73 yuan.
In Hong Kong, trading in stocks and derivatives as well as in Stock Connect Northbound channel was cancelled after the local weather agency raised the typhoon signal to No. 8, the third-highest level, and maintained the warning past noon, market operator Hong Kong Exchanges and Clearing said. in a statement.
The Hong Kong Observatory issued its first No 8 signal this year in August as Typhoon Higos lashed the city. On Tuesday, the Observatory issued the No 8 northeast gale or storm signal at 5:40am, as Tropical Storm Nangka drew closer to the city. The signal is expected to remain in force for most of Tuesday. The Hang Seng Index jumped 2.2 per cent on Monday, the biggest gain since July 21.
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