Hong Kong stocks climbed to a three-month high after a private report showed Chinese manufacturing expanded in May, countering concerns about an end to the yuan’s rally.
The Hang Seng Index jumped 1.1 per cent to 29,468 at the close of Tuesday trading to the highest since March 3, as gains among technology stocks accelerated in late trading. The rally put the benchmark in a potnetial breakout from a tight trading range of the past three months. The gauge added 1.5 per cent last month, with investors shifting their focus to growth prospects from global inflation risks.
The Shanghai Composite Index added 0.3 per cent, with stocks in tight range as the yuan weakened against the US dollar in onshore trading. The central bank asked banks to set aside more foreign currencies as reserves to staunch its recent rally, the first such directive in 14 years.
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The Caixin China PMI Manufacturing Index rose to 52 in May from 51.9 for the previous month, signifying the nation’s industrial companies were in expansion mode. The report, which surveys smaller enterprises, contrasted with a slight drop in activity in an official manufacturing gauge published by the National Bureau of Statistics a day earlier.
US stock markets were closed overnight for the Memorial Day holiday. Investors are keeping a close watch on non-farm payrolls due on Friday. While the Federal Reserve has repeatedly assured that the accommodative policies will stay for an extended period of time, the pledge has not fully dispelled worries about an earlier than expected tapering in monetary stimulus.
“We also have a swathe of other data globally, but all will culminate with the US non-farm payrolls on Friday,” said Jeffrey Halley, an analyst at Oanda. “After [April’s] huge downside miss, [May’s] data really needs to perform to keep that inflation story alive and taper-talk on track.”
Technology stocks paced Hang Seng Index winners. Meituan added 6.5 per cent to HK$313 as the best performer on the gauge, adding to a 10.9 per cent surge on Monday. The food-delivery platform operator’s surprised analysts with stronger than expected revenue that more than doubled in the first quarter.
Sunny Optical added 4.4 per cent to HK$206 and Alibaba Group Holding, which owns this newspaper, rose 3.4 per cent to HK$218.20.
CSOP Huatai-PineBridge CSI Photovoltaic Industry ETF, the first such cross-listing product between Hong Kong and Shanghai, kicked off trading in the city. The exchange-traded fund (ETF) dropped 1.2 per cent to HK$7.835. EFT products form part of a broader expansion of thematic funds over the past three years.
There were 170 thematic funds domiciled in China overseeing US$49 billion of assets at the end of March, according to Morningstar. In the first quarter this year alone, 18 of them came to market with social, security and political and energy transition themes attracting new money, it said.
In Hong Kong, technology-themed funds accounted for two-thirds of the US$2.6 billion of assets, Morningstar said in a special Global Thematic Fund Report released on Monday.
Ningbo David Medical Device, a maker of infant-care equipment, surged 12 per cent to 18.40 yuan in Shenzhen, leading gains among stocks seen as key beneficiaries of China’s move to spur birth rate under its latest three-child policy tweak. Shanghai Aiyingshi, a retailer of maternal and child products, surged 10 per cent to 30.50 yuan in Shanghai.
Two debutants got off with a strong start in their mainland market debut. Essence Fastening Systems, which makes hardware products from screw bolts to connectors, jumped 61 per cent in Shenzhen. Jiangsu Boiln Plastics, a producer of engineering plastic products, climbed 33 per cent.
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