Chinese Shares Rally on More Signs of Economic Revival

By Sherry Qin

Chinese shares rallied after a private gauge of China's services sector showed a strong October reading, adding to recent signs that Beijing's stimulus push is revitalizing the world's second-largest economy.

The benchmark Shanghai Composite Index erased slight opening losses to rise 1.8% on Tuesday. The Shenzhen Composite Index and the ChiNext Price Index also jumped, climbing 2.7% and 4.1%, respectively, by the midday break.

Finance and software stocks led the gains. Citic Securities advanced 4.85% and East Money Information surged 9.9%. Beijing Kingsoft Office Software was 5.9% higher.

The Caixin services purchasing managers index earlier rose to 52.0 in October from 50.3 in September, which analysts said was the biggest increase in almost two years.

The reading was in line with China's official nonmanufacturing gauge covering construction and service activity, which returned to expansionary territory in October. Both the official and Caixin manufacturing PMIs reported activity growth last month.

"The substantial rise in the Caixin services and composite PMIs adds to our view that the economy regained momentum in October," said Julian Evans-Pritchard, head of China economics at Capital Economics.

Property stocks also supported the indexes as investors cheered signs of life in the beleaguered housing market following the late-September stimulus push. New home sales rose 0.9% year-over-year in October, the first expansion since last June, China's Housing Ministry said last week.

China Vanke increased 2.2% and Greenland Holdings soared 9.9%.

UBS Securities China Equity Strategist Lei Meng expects the upward momentum fueled by policy easing to continue in the short run, although likely at a more gradual pace.

"Stock market participants and real economy's expectations have reversed after the gradual implementation of policy relaxations since late September," Lei said in a note.

Adding to the positive sentiment, Chinese Premier Li Qiang, speaking at the China International Import Expo on Tuesday, reiterated that the country remains confident about reaching this year's economic growth target.

"Stimulus efforts should continue to provide a tailwind over the coming months," Capital Economics' Evans-Pritchard said. Investors are awaiting more supportive measures to come out of the National People's Congress Standing Committee meeting, which is under way.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

November 04, 2024 23:34 ET (04:34 GMT)

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