SHANGHAI: China stocks soared on Wednesday as data showed manufacturing activities expanded at the fastest pace since 2012, beating market expectations and igniting hopes of a strong recovery after the country dismantled its strict COVID-19 restrictions.
** China’s blue-chip CSI300 Index rose 1.4% by the lunch break, and the Shanghai Composite Index gained 0.9%.
** Hong Kong’s Hang Seng benchmark rallied 3.4% and the China Enterprises Index soared 4%.
** As China re-opens its borders, investors are awaiting economic data to gauge the pace of recovery.
** The official manufacturing purchasing managers’ index (PMI), which measures China factory’s activities, stood at 52.6 in February against 50.1 in January.
** The PMI far exceeded an analyst forecast of 50.5 and was the highest reading since April 2012, proving economic recovery is on track.
** The strong PMI data reflected that the production and logistic disruptions related to the zero-COVID policy and massive infection dissipated quickly, noted Ken Cheung, chief Asian FX strategist, Mizuho Bank.
** “We had already been expecting a rapid near-term rebound, but the PMIs suggest that even our above-consensus forecast for GDP growth of 5.5% this year may prove too conservative,” said Julian Evans-Pritchard, head of China economics at Capital Economics.
** The focus of the rest of the week will be on National People’s Congress starting on March 4. Investors are on a wait-and-watch mode for policy signals including this year’s GDP growth target.
** Investors are trying to gauge how strongly the authorities are prioritizing a specific growth rate through the language used in the statements. They will also scrutinize the credibility of the accompanying macro and regulatory policies, said Aninda Mitra, Head of Asia Macro & Investment Strategy of BNY Mellon Investment Management.
** CSI telecom index leaped 4.6% and computer index climbed 3.7%.
** China United Network Communications soared 10.0%, China Mobile climbed 5.5% while China Telecom gained 8.7%.
** Tech giants listed in Hong Kong jumped 5%. Tencent was up 5.7%, Alibaba rallied 5.1%, and Trip.com gained 4.7%.
** HSI finance index was up 2.6%, properties added 2.3%, commerce and industry leaped 4.1%.