China Manufacturing Activity Index Contracts Third Consecutive Month, HSBC Announces Stock Buyback

Li Chen
31 Jul, 2024
Hong Kong

Benchmark indexes in Shanghai and Hong Kong soared after manufacturing activities contracted for the third month in a row. 

The Hang Seng and the CSI 300 indexes jumped 2% amid heightened speculation that policymakers may announce more specific measures to revive consumer confidence and market-supportive measures. 

In yesterday's trading, benchmark indexes dropped sharply after the Politburo statement offered vague support for economic reform but lacked specific details. 

However, the latest weakness in manufacturing activities supports the argument that policymakers will announce more support in the second half. 

The PMI manufacturing index in July eased to 49.4 from 49.5 in June, the National Bureau of Statistics reported Wednesday. 

A reading below indicates contraction in activities, and one above shows an increase. 

Manufacturing activities contracted for the third month in a row amid weak domestic demand growth. 

China's non-manufacturing PMI Index, which tracks service activities, dropped to an 8-month low of 50.2 in July from 50.4 in June, the official data showed. 

The selling price for services dropped for the tenth month in a row, but the rate of decrease was the softest in three months. 

 

China Stock Movers 

The Hang Seng index is set to close down more than 2% in July and extend losses to more than 11% from the peak reached in May, after investors lowered stimulus expectations despite fragile economic recovery. 

The Hang Seng index soared 2% to 17,348.39, and the CSI 300 index advanced 2.1% to 3,438.78. 

HSBC increased 3.2% to HK$68.95, and the financial services bank said it set aside $3 billion for a stock repurchase plan and announced better-than-expected quarterly results. 

Hang Seng Bank declined 4.2% to HK$97.50 after the bank trimmed its interim dividend from HK$0.18 to HK$0.12, payable on September 5 to shareholders on record on August 15. 

Hang Lung Properties rose 3.2% to HK $5.82 and rebounded from the previous day's loss of 15% following a sharp decline in earnings. 

Hang Lung, one of the largest developers in Hong Kong, reported that net income in the first half plunged 56% to HK $1.06 billion, or $136 million, and revenue rose 17% to HK $6.11 billion. 

The earnings dropped in the period largely because of a reversal in the fair value of its properties to a loss of HK $634 million from a gain of HK $251 million. 

The company also cited weak customer traffic at its Plaza 66 mall in Shanghai and a decline in leasing revenue because more shoppers prefer to shop abroad, taking advantage of the yen's weakness. 

Zhejiang Liju Thermal Equipment, a maker and distributor of heat equipment, soared more than 50% in its first trading day in Shanghai to 61.05 yuan. 

Liju Thermal priced its initial public offering at 40 yuan per share.