China Indexes Rebound After Factory Activities Resume Expansion

Li Chen
31 Oct, 2024
Hong Kong

Stock market indexes wavered in China and Hong Kong, and investors awaited the outcome of a key policy legislative meeting to decide the possible fiscal measures. 

The Hang Seng index gained 0.5%, the CSI 300 index added 0.2%, and the yuan traded around 7.13 against the U.S. dollar.

Investors are hoping that lawmakers will approve the increase in the central government deficit level, which could provide additional funding to local government after the meeting of the legislative committee of the National People's Congress next week. 

The latest official survey of the manufacturing sector showed a slight improvement in activities in October as the recent string of monetary measures and the easing of restrictions to buy residential property began to impact economic conditions. 

The official manufacturing PMI in China increased to 50.1 in October from 49.8 in September, according to the National Bureau of Statistics. 

Factory activities increased for the first time since April, ending five months of contraction, after output growth reached a six-month high and the growth in new orders stabilized.

The reading above 50 indicates expansion, and below shows contraction in the sector. 

The official non-manufacturing PMI in China, which tracks both service and construction sectors, also returned to growth amid rising activities in both sectors. 

The construction sector subindex eased to 50.4 in October from 50.7 in September, while the service sector subindex expanded to 50.1 from 49.9 in the previous month. 

The service sector activities picked up during the National Day holiday earlier in the month as demand for parcel delivery and air and rail transportation rose. 

The shift in policy stance is finally beginning to impact the manufacturing and service sectors, but the construction sector continues to struggle amid weak demand and falling home prices. 

The composite PMI, which includes manufacturing and non-manufacturing activities, rose to 50.8 from 50.4 in the previous month. 

 

China Stock Movers 

The Hang Seng index increased 0.5% to 20,478.37, and the mainland-focused CSI 300 index advanced 0.2% to 3,897.90.

China Construction Bank increased 0.6% to HK $6.0 after the company reported a 4.5% increase in profit from a year ago in the third quarter. 

China Life Insurance rose 2.1% to $16.70 after the insurance company reported a 17-fold increase in income from a year ago in the third quarter following investment gains in stocks.

Industrial and Commercial Bank of China increased 0.7% to HK $4.65 after the bank reported 4% increase in third quarter profit. 

Electric vehicle makers struggled with the worry that intense price competition would weigh on profitability. 

Li Auto increased 0.6% to HK $109.30, BYD fell 3.3% to HK $285.40, and Geely Automobile Holdings dropped 2.5% to HK $14.06.