The Shanghai Composite Index (SHCOMP) rose 0.3 percent to 2,194.43 at the close, led by consumer companies. Hong Kong’s Hang Seng China Enterprises Index dropped 0.4 percent, paring a loss of as much as 1.5 percent. Mainland stocks halted three days of losses amid signs stimulus measures are helping the government to achieve its growth target this year. Data today showed overseas shipments increased 14.5 percent in July from a year earlier, compared with the median estimate of 7 percent.
“Investors responded well to the data,” said Zhang Gang, a strategist at Central China Securities in Shanghai. “They were worried about worse-than-expected exports hence the slump yesterday. This is a reasonable outcome. We will still continue to fluctuate before” inflation data this weekend, he said.
The Shanghai gauge capped its longest stretch of weekly gains since the period ended Dec. 6, as signs of monetary easing, accelerated government spending and gains in manufacturing spurred speculation the nation’s economic growth will pick up. The measure of China’s $3.5 trillion stock market outperformed equity indexes in 46 emerging and developed countries in the six weeks through Aug. 4.
The Hang Seng China AH Premium Index climbed as much as 1.4 percent to 94.18 today, signaling the narrowest gap between dual-listed stocks in Hong Kong and China since May 27. The CSI 300 Index added 0.2 percent, erasing a weekly loss. Han’s Laser Technology Co. and GoerTek Inc., suppliers to Apple Inc., climbed at least 1.5 percent. Inner Mongolia Yili Industrial Group Co. snapped a two-day slump, adding 1.9 percent.
The Hang Seng Index (HSI) slid 0.2 percent to 24,331.41 after falling as much as 0.8 percent. The Hang Seng China index, known as the H-share index, lost 1.4 percent this week, its steepest five-day loss since April. China Vanke Co., the nation’s biggest developer, slid 6.1 percent in Hong Kong after its shares became eligible for short selling today.
Recent losses for Chinese stock indexes come amid concern shares are overbought and after a private gauge of the services trade declined to a record low. The H-shares gauge rallied 20 percent from this year’s low in March last week, while the Shanghai gauge jumped 11 percent from its 2014 nadir. The index will probably end its rally within days and fall about 10 percent, Tom DeMark, the developer of market-timing indicators, said this week.
China’s trade surplus surged to a record as imports fell, suggesting global demand will help the government achieve its 2014 economic-expansion goal of about 7.5 percent. Imports dropped 1.6 percent, leaving a trade surplus of $47.3 billion, the Beijing-based customs administration said today.
“China’s economy is picking up momentum and it looks sustainable,” Nader Naeimi, the head of dynamic asset allocation at AMP Capital Investors Ltd., which manages about $131 billion, said by phone. “Chinese equities are still attractively valued, offering investors a good buying opportunity.”
July economic data due over the next week will give a sense of how well growth is holding up after accelerating to 7.5 percent in the second quarter from a year earlier. The statistics bureau releases inflation figures tomorrow, followed by industrial production, fixed-asset investment and retail sales on Aug. 13.
Hong Kong Stocks
In Hong Kong, China Unicom (Hong Kong) Ltd., the mainland’s second-largest mobile carrier, fell 1.7 percent to after its second-quarter net income missed analyst estimates.
Great Wall Motor Co. (2333), China’s biggest maker of sports utility vehicles, slid 2.2 percent after its July sales volume slid. A separate report today from the Passenger Car Association showed vehicle-sales growth slowed in China last month as showroom traffic thinned with the summer heat and the soccer World Cup.
Futures on the Standard & Poor’s 500 Index fell 0.7 percent after U.S. President Barack Obama authorized air strikes in Iraq. The S&P 500 lost 0.6 percent yesterday as concern that the Ukraine conflict is escalating offset better-than-estimated earnings and a drop in American jobless claims.
“The current state of the market is more of a reflection of what’s happening around the world,” said Khiem Do, who helps oversee about $60 billion as Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd. “We are in a kind of sentiment environment which is more about profit taking mode than taking risks.”