China's Service Sector Growth Accelerates in April, Stock Indexes Extend 3-day Rally

Li Chen
05 Jun, 2024
Hong Kong

Stocks in Shanghai and Hong Kong attempted to rebound for the third session in a row, and the yuan struggled amid persistent devaluation worries. 

The CSI 300 and the Hang Seng index edged up 0.3% after the service sector expanded at the fastest pace in May. 

The Caixin-SS&P Global services purchasing managers' index increased to 54.0 in May from 52.5 in April. 

Earlier in the week, the private survey of the manufacturing sector showed an expansion, and together the two reports showed rising business activities last month. 

The Hang Seng index advanced on speculation that the economy is likely to hit the government's target rate of 5% and corporate earnings in the current quarter are likely to be ahead of market expectations. 

China indexes have been on the rebound in the last three months after hitting their lows in late January, but benchmark indexes are still down more than 40% from the peak reached in January 2018. 

Moreover, China's economy is likely to continue to face deceleration, and GDP growth is likely to slow to less than 3% over the next three years. 

The Chinese yuan hovered at 7.252 against the U.S. dollar, and the currency traded near a five-month low. 

 

China Stock Movers 

The CSI 300 index decreased 0.3% to 3,606.94, and the Hang Seng index jumped 0.4% to 18,525.56. 

Meituan declined 0.2% to HK$113.30 ahead of the food delivery company's earnings after the market closed. 

The food delivery company is expected to report a narrower loss in the first quarter as the company prioritizes profitability over sales growth. 

Trip.com declined 1.3% to HK$403.0 after the online travel agency announced a $1.3 billion convertible debt offering to repay its existing debt, fund its foreign expansion, and finance its working capital needs. 

Electric vehicle makers were in focus ahead of the release of international trade data later in the week. 

BYD increased 1.2% to HK$233.60, Li Auto fell 0.4% to HK$79.25, and Xpeng rose 1.7% to HK$32.85.