China, HK shares rally on tech rebound; activity data in focus

HONG KONG: China and Hong Kong stocks jumped on Monday, led by technology shares as chipmakers rallied on the back of strong earnings, while consumption and liquor shares weakened ahead of data releases later in the day.

At the midday break, the Shanghai Composite index was up 0.8% at 3,960.19 points.

China’s blue-chip CSI 300 index was also up 0.8%.

Tech sector led gains, with the start-up board ChiNext Composite index higher by 1.3% and Shanghai’s tech-focused STAR 50 index was 3%.

The CSI Semiconductor Index rallied 4% and the AI Index added 1.5%.

Memory chip maker CXMT surged 9%, while Shenzhen China Micro Semiconductor surged 15% to a one-month high after the company reported a nearly 100% jump in profit for the first half.

Limiting gains, the CSI Liquor Index fell 3.3%, with market heavyweight Kweichow Moutai down 4.2% after a profit drop.

The consumer staples sector weakened 2.8%.

A slew of data later in the day will provide more clues about the health of the world’s second-largest economy, after July bank loans data late last week showed a record contraction as credit demand faltered.

China’s industrial output was expected to rise 4.8% in July from a year earlier, slowing from 5.3%, while retail sales was forecast to expand 1.5%, better than 1.0% previously.

“These data will provide a direct test of the true strength of the recovery in domestic demand,” analysts at Nanhua Futures said in a note.

The market’s pricing focus may shift to actual earnings performance, resulting in range-bound consolidation and rotation among individual sectors, they added.

In Hong Kong, the benchmark Hang Seng Index was up 1.6% at 25,521.99, and the Hang Seng Tech Index added 2%.

Around the region, shares drifted sideways as investors kept a wary eye on oil prices, which inched higher on Monday as US-Iran peace talks stalled.

Iran called on the US to accept defeat on Saturday, while President Donald Trump blasted Tehran as “very evil” and told Americans to prepare for continued high fuel prices as a result of the war.