China stocks gain in rally fuelled by banks following steady earnings reports; eyes on PMI data

China stocks gain in rally fuelled by banks following steady earnings reports; eyes on PMI data

29 Mar China stocks gain in rally fuelled by banks following steady earnings reports; eyes on PMI data

Posted at 02:58h in Asia by

Chinese stocks rose, on track for a second straight month of gains, led by state-owned banks which rose on steady earnings reports. Investors remain watchful ahead of official PMI data due this weekend, which is expected to show manufacturing activity improved after contracting for five consecutive months.

The Shanghai Composite Index added 0.6 per cent to 3027.71 as of 10am local time, bringing the gain this month to 0.3 per cent. The CSI 300 Index of the nation’s biggest companies added 0.3 per cent. Hong Kong’s financial markets are closed for Easter holidays.

The Agricultural Bank of China (ABC) jumped 1.4 per cent to 4.23 yuan and China Construction Bank advanced 1.3 per cent to 6.92 yuan after posting steady earnings growth for 2023. Oil giant PetroChina jumped 5.7 per cent to 9.78 yuan while peer CNOOC advanced 3.5 per cent to 29.12 yuan per share.

“Sentiment is shifting”, and the market has started to reward positive news on earnings, Steven Sun, head of research at HSBC Qianhai Securities said in a report on Thursday. “Market can grind higher if supported by fundamentals, especially earnings, in coming months,” he added.

The Shanghai Composite Index has benefited from Beijing’s ramp-up in policy support to stimulate economic growth which helped it post its best winning steak in over a year. The market is now expecting more quantitative easing measures after Chinese president Xi Jinping reportedly instructed the central bank to buy more treasury bonds.

“The overall economy is showing positive signs of recovery … creating a good environment for the steady profit growth of the bank,” said Gu Shu, ABC’s chairman.

Meanwhile, government data due this weekend is likely to show further signs of recovery in the world’s second largest economy. The official PMI manufacturing index is forecast to rise to 50.1 in March from 49.1 in February, according to a Bloomberg poll, which would mark the first expansion in manufacturing activity following five consecutive months of contraction.

Other key Asian markets rose to track overnight gains in the US. Japan’s Nikkei 225 added 0.3 per cent and South Korea’s Kospi added 0.1 per cent. Australia’s markets are closed for the Easter break.

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