Mainland China markets soar after private survey shows Chinese manufacturing activity grew slightly

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SINGAPORE – Mainland China shares rose along with most other Asia-Pacific indices on Monday, as a private survey of Chinese manufacturing activity showed slight growth.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index for July stood at 50.4, compared to the 51.5 predicted in a Reuters poll. In June, the score was 51.7.

Still, the reading was better than official China Purchasing Managers Index data released this weekend, which showed a contraction in factory activity.

Mainland China markets gained. The Shanghai Composite was up 0.16% and the Shenzhen Component was up 1.109%.

The contraction in China’s official PMI for the manufacturing sector… underscores the magnitude of uncertainty over growth due to a rise in Covid cases, decreasing global demand and real estate market risks.

Venkateswaran Lavanya

Economist, Mizuho Bank

PMI measurements are sequential and represent month-over-month expansion or contraction. The 50 mark separates growth from decline.

“The contraction of China’s official manufacturing PMI to 49.0 in July from 50.2 in June underscores the magnitude of the uncertainty over growth due to a rise in Covid cases, which will affect global demand and risks in the real estate market are slowing down,” said Venkateswaran Lavanya, an economist at Mizuho Bank. wrote in a Monday note.

“The poor start to the third quarter further increases the risk that China will miss its 2022 GDP growth target of ‘about 5.5%’, against the background of authorities signaling last week that there are no major stimulus would come even if the country sticks to its “dynamic zero-covid” policy,” Lavanya wrote.

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Hong Kong’s Hang Seng index offset some losses, but still lost 0.32% while shares of tech giant Alibaba lost 2.2%. Earlier in the session, the stock fell more than 5%.

Alibaba was added Friday in the US to a list of companies at risk of being removed under the Holding Foreign Companies Accountable Act. US-listed stocks plunged 11% in regular Osession trading.

“Alibaba will continue to monitor market developments, comply with applicable laws and regulations and strive to maintain its listing on both the NYSE and the Hong Kong Stock Exchange,” the company said in a statement Monday.

HSBC will announce its interim results on Monday.

Japan’s Nikkei 225 gained 0.53% and the Topix index rose 0.77%.

In Australia, the S&P/ASX 200 was 0.52% higher.

South Korea’s Kospi was roughly flat and the Kosdaq gained 0.48%.

MSCI’s widest index of Asia-Pacific stocks outside of Japan lost 0.11%.

Currencies and Oil

The US dollar index, which tracks the greenback against a basket of its peers, stood at 105,775, below last week’s level.

The Japanese yen traded at 132.62 per dollar, stronger than its level at the beginning of last week. The Australian dollar stood at $0.6982.

Oil futures fell more than 1% each. US crude futures fell 1.37% to $97.27 a barrel, while Brent crude fell 1.09% to $102.84 a barrel.



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