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Markets

China stocks fall but gain 5pc in November as recovery picks up steam

  • The blue-chip CSI300 index fell 0.4pc, to 4,960.25, while the Shanghai Composite index slipped 0.5pc to 3,391.76, reversing earlier gains as investors booked profits.
Published November 30, 2020

SHANGHAI: China stocks ended lower on Monday, but posted gains in November, underpinned by stocks in traditional industries, as more data pointed to a continued recovery in the world's second-largest economy against the backdrop of the COVID-19 pandemic.

The blue-chip CSI300 index fell 0.4pc, to 4,960.25, while the Shanghai Composite index slipped 0.5pc to 3,391.76, reversing earlier gains as investors booked profits.

Sentiment was hit by concerns over Sino-U.S. tensions.

The Trump administration is poised to add China's top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, according to a document and sources.

Though for the month CSI300 gained 5.6pc, while SSEC added 5.2pc, both posted their biggest monthly advance since July.

Leading the gains for the month, the Shanghai SE50 index, which tracks the 50 most representative traditional stocks on the Shanghai Stock Exchange, rallied 5.8pc.

China's factory activity expanded at the fastest pace in more than three years in November, while growth in the services sector also hit a multi-year high, as the country's economic recovery from the virus outbreak stepped up.

Upbeat data released on Monday suggested the world's second-largest economy was on track to become the first to completely shake off the drag from widespread industry shutdowns, with recent production data showing manufacturing now at pre-pandemic levels.

The main reason for the strong rally was China's continued recovery, said Zhang Gang, an analyst with China Central Securities.

The cyclicals rally would also continue for a while as their valuations remain low, at least before China's Lunar New Year holiday if investors do not find good opportunities in growth players, Zhang added.

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