Monday, October 25

China stocks end higher as weak factory data fan easing hopes

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SHANGHAI — China stocks closed up on Thursday as weaker-than-expected September factory activity raised hopes for more policy easing, while power-intensive sectors rebounded after Beijing stepped up efforts to quell fears of a power shortage.

** The Shanghai Composite Index gained 0.9% to 3,568.17 points. The blue-chip CSI300 index rose 0.7%, to 4,866.38.

** Quarterly, the CSI300 Index dropped 6.8%, the biggest loss since the first quarter of 2020.

** China’s factory activity unexpectedly shrank in September as high raw material prices and power cuts pressured manufacturers in the world’s second-largest economy, while the services sector returned to expansion as COVID-19 outbreaks receded.

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** “Going into 4Q, we expect government bond net issuance to remain elevated at around Rmb900bn per month to support infrastructure investment, complemented by another 50bps reserve requirement ratio cut likely in late October after the 3Q GDP release,” Morgan Stanley said in a note.

** Stocks hit by the power crunch rebounded as China stepped up to commit coal supply ahead of the winter season.

** The coal index went up 3.8%, while the power-intensive sectors, non-ferrous metal, steel and chemicals, rose more than 2% each.

** The real estate sub-index gained 1.2%, after China’s central bank said financial institutions should maintain a stable and healthy development of the property market and protect consumer rights.

** “As policy for property market has already bottomed out and expect to see more favorable policy ahead, we think it is a good time to add both China property and property management sectors,” CGS-CIMB Securities said.

** Shares of new energy vehicles surged 4.8%.

** Consumer staples and tourism added as China welcomes the week-long National Day holiday starting from Oct. 1. (Reporting by Shanghai Newsroom; editing by Barbara Lewis)

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