On the second day of the stock market's holiday, the Hang Seng Index, which consists of 82 major constituent stocks, rose by 50.53 points (0.29%) from the previous trading day to 17,769.14 points, while the China Mainland Stock Index (formerly known as the H share index) consisting of mainland Chinese stocks rose by 43.05 points (0.68%) to 6,374.91 points. The trading volume has slightly expanded to HKD 118.4342 billion (June 28 was HKD 98.887 billion).
Expectations of a rebound in China's economy are supporting the market. The June manufacturing purchasing managers' index (PMI) released by private companies on the first day reached 51.8, higher than expected, and reached a high level not seen in about three years since May 2021. Before that, the manufacturing PMI for the same month announced by the National Bureau of Statistics, etc. was 49.5, below the dividing line of 50 for two consecutive months, but it is not so pessimistic because it is within the expected range. However, the upside is limited. The rise of U.S. long-term interest rates is a burden. In the U.S. bond market on the first day, the rise in the yield of 10-year treasuries continued, briefly reaching a high level not seen in about a month.
In the constituent stocks of the Hang Seng Index, Ideal Auto (2015/HK), a new electric vehicle (EV) maker, rose by 5.0%, OOIL (316/HK), a leading container shipping company, rose by 4.7%, and China National Offshore Oil Corporation (CNOOC: 883/HK), a major petroleum company, rose by 4.5%. The strong sales of Ideal Auto are a key factor. The number of customer deliveries in June this year increased by 46.7% compared to the same month last year. The growth rate has accelerated significantly from 23.8% in the previous month.
In terms of sectors, Chinese banks and insurance are up. ABC (1288/HK) is up 4.2%, CM Bank (3968/HK) is up 2.7%, NCI (1336/HK) is up 5.0%, and CPIC (2601/HK) is up 2.9% each.
The Chinese real estate sector is also being sought after. Agile Group Holdings (3383/HK) rose by 3.9%, Cifi Holdings Group (884/HK) rose by 3.2%, and Shimao Group Holdings (813/HK) rose by 2.8% at the close. It is reported that real estate sales in China have shown signs of bottoming out, which is a supporting factor. According to data from the CRIC survey company, the sales of the top 100 companies (including joint venture companies, etc.) in June this year decreased by 16.7% compared to the same month last year, but the decline rate has shrunk significantly from 33.6% in May, marking the smallest decline in the past year.
The material sectors such as cement and steel are also strong. CR Building Material Tech (1313/HK) rose by 4.3%, CNBM (3323/HK) rose by 2.9%, Chongqing Iron & Steel (1053/HK) rose by 3.3%, and Angang Steel (347/HK) rose by 2.5% at the close.
On the other hand, consumer sectors such as home appliances, sporting goods, and food are lackluster. Hisense Home Appliances Group (921/HK), Haier Smart Home (6690/HK), Li Ning (2331/HK), Anta Sports (2020/HK), Uni-President China Holdings (220/HK), and Nissin Foods (1475/HK) each fell by 3.5%, 3.1%, 5.0%, 2.7%, 2.4%, and 2.1%. Excessive concerns about the future of China's economy are easing, but concerns remain that it will take time for domestic demand to recover.
On the other hand, the domestic market rose slightly for the third consecutive day. The Shanghai Composite Index, a major index, closed at 2997.01 points, up 0.08% from the previous day. Bank stocks are high. Brewery stocks, energy stocks, public utility stocks, transportation stocks, and more were also bought. On the other hand, high-tech stocks are low. Pharmaceutical stocks, auto stocks, material stocks, real estate stocks, and more were also sold.
Asia Research Co., Ltd.