China Manufacturing Growth Unexpectedly Shrinks, Hang Seng Index Extends Fourth Monthly Gain In May

Li Chen
31 May, 2024
Hong Kong

Stocks in Shanghai and Hong Kong advanced and halted a three-day slide on speculation that more supportive policy measures may be in the making. 

Benchmark indexes in Hong Kong jumped nearly 1% and in Shanghai advanced 0.2% after an official report suggested that the economic recovery is uneven and fragile and the manufacturing sector is struggling. 

The Purchasing Managers' Index for the manufacturing sector contracted in May after remaining in expansion in the previous two consecutive months, the National Bureau of Statistics reported Friday. 

The manufacturing PMI sipped to 49.5 in May from 50.4 in April; any reading below the 50-mark indicates a growth decline, and any reading above shows an increase in growth. 

The manufacturing sector's activities contracted because of a decline in new orders and weakening foreign demand. 

The non-manufacturing PMI slowed to 51.1 in May, and the index representing activities in the service and construction sectors expanded for the 17th month in a row, but at the slowest pace. 

The weakness in the manufacturing sector raised hopes that more policy measures may be needed to revive broader economic growth.

Beijing's slow and piecemeal approach to reviving economic growth is likely to weigh on market sentiment in the coming weeks, as government bond sales are still behind the official schedule.

 

China Stock Movers 

Market rally was broad, and stocks in energy, mining, manufacturing, and advanced technology advanced. 

The CSI 300 index increased 0.2% to 3,601.55, and the Hang Seng index advanced 0.9% to 18,402.19. 

The Hang Seng indexes is set to close higher by more than 3% in May, and advance for the fourth month in a row. 

China Shenhua Energy gained 2.7% to HK$38.50, China Petroleum and Chemical rose 0.8% to HK$5.06, and CNOOC advanced 2.9% to HK$21.05. 

Electric vehicle makers advanced in the hopes that authorities were likely to announce additional measures to support domestic sales. 

Li Auto increased 3.1% to HK$80.30, BYD added 2.2% to HK$223.80, Xpeng jumped 4.4% to HK$33.20, and NIO jumped 9.9% to HK$42.0. 

Auto Streets Development soared more than 50% on the first day of trading, and the company listed its stock in Hong Kong for HK15.60.