A-shares ex­tend rally, boosted by fac­tor y ac­tiv­ity

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

Chi­nese A-shares ex­tended a rally on Tues­day with the Shang­hai Com­pos­ite In­dex climb­ing to a three and a half month high.

In­vestors were cheered by a sur­vey in­dict­ing that factory ac­tiv­ity ac­cel­er­ated in July and with the re­lease by the listed com­pa­nies of peppy pre­lim­i­nary half-year profit re­ports.

The Shang­hai Com­pos­ite In­dex closed the day with a 0.60 per­cent gain to 3,292.64 points. Fi­nance and Xion­gan-themed shares were among the big­gest climbers. New China Life In­sur­ance Co Ltd shares in­creased by the 10 per­cent upside limit.

The Shen­zhen Com­po­nent In­dex rose by 0.19 per­cent, while the ChiNext startup in­dex climbed by 0.27 per­cent. The SSE 50, dubbed China’s “Nifty Fifty” in­dex, scaled a two-year peak.

China’s man­u­fac­tur­ing ac­tiv­i­ties ex­panded at the fastest pace in four months in July, on the back of eco­nomic sta­bi­liza­tion, ac­cord­ing to a sur­vey con­ducted by Markit and spon­sored by Caixin Me­dia Co Ltd on Tues­day.

The Caixin China General Man­u­fac­tur­ing Man­agers’ In­dex stood at 51.1 for July, up from 50.4 in June, above the 50-point mark that sep­a­rates growth from con­trac­tion.

“Good PMI data and good earn­ings per­for­mances by listed com­pa­nies in the first half have con­trib­uted to to­day’s share rise,” said Hong Hao, chief strate­gist at BOCOM In­ter­na­tional Ltd, adding that large-cap shares and up­stream re­sources stocks per­formed the best.

Ac­cord­ing to mar­ket in­tel­li­gence provider Tonghuashun, 108 A-share listed com­pa­nies are sched­uled to re­lease half-year earn­ings re­ports this week. Of these, 75 com­pa­nies have al­ready re­leased pre­lim­i­nary re­ports and 62 re­ported profit gains.

For ex­am­ple, Shan Dong Hai­hua Com­pany Ltd, Shanxi Xis­han Coal and Elec­tric­ity Power Co Ltd, Nuode In­vest­ment Co Ltd, China Fangda Group Co Ltd, Suzhou Boa­max Tech­nolo­gies Group Co Ltd and Shang­hai Xuerong Bio-Tech­nol­ogy Co Ltd all re­ported that their first-half prof­its would in­crease more than 200 per­cent year-onyear re­spec­tively.

A-share

listed firms

are sched­uled to re­lease half-year earn­ings re­ports this week

On July 27, the ChiNext board rose 3.62 per­cent, its best day in 14 months, rais­ing hopes star­tups could re­bound after their sus­tained weak­ness in the past two years.

But in­vestors may be read­ing too much into the fact that some State-backed funds, dubbed the “na­tional team”, had joined the ranks of the 10 big­gest share­hold­ers of some ChiNext firms, ac­cord­ing to Gao Ting, head of China Strat­egy at UBS Se­cu­ri­ties.

“Bank­ing was the only sec­tor in which the na­tional team in­creased its share­hold­ing,” said Gao.

Gao said the fo­cus of the State-backed funds would re­main fi­nan­cial.

“We do not ex­pect the team to change (to other sec­tors) ... and be­lieve it will con­tinue in­creas­ing its ex­po­sure to bank­ing stocks while de­creas­ing its ex­po­sure to non-fi­nan­cials.”

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