Chinese equities led gains among Asian markets as an official manufacturing gauge showed a third month of expansion. Shares in Seoul and Sydney declined, leaving the regional benchmark measure little changed.
Utilities led gains among Chinese shares, with electricity producer Shenergy Co. surging 10 percent, on speculation the government will boost mergers among power companies. Great Wall Motor Co. jumped 5.4 percent to lead an index of mainland shares in Hong Kong higher. Mitsubishi UFJ Financial Group Inc. rose 1.5 percent as Japan’s Topix index gained a 12th day. Australia & New Zealand Banking Group Ltd. dropped 1.4 percent as lenders dragged the country’s benchmark equity index lower.
The MSCI Asia Pacific Index dropped less than 0.1 percent to 151.33 as of 12:46 p.m. in London. The Shanghai Composite Index climbed 4.7 percent, extending its gain this year to 49 percent, while the Hang Seng China Enterprises Index rallied 1.4 percent. Chinese stocks listed in Hong Kong are included in the regional measure.
“The Chinese bull market is intact,” said Nader Naeimi, a Sydney-based fund manager at AMP Capital Investors Ltd. “The pace of gains has been dramatic so a reduced pace of upward acceleration would be feasible now. Retail investors have benefited, so as they sell, there is buying demand from institutions and foreigners.”
Hong Kong’s Hang Seng Index rose 0.6 percent. Stocks in Shanghai rebounded after a 6.5 percent rout on Thursday, while 30-day volatility on the measure rose to the highest in almost four months. The Shanghai Composite is up 137 percent over the past year, the biggest advance among major global benchmark indexes tracked by Bloomberg.
China’s bull market is far from ending, Liu Yuhui, a researcher at the Chinese Academy of Social Sciences, wrote in a China Securities Journal commentary on Monday.
The nation’s official Purchasing Managers’ Index rose to 50.2 in May, compared with 50.1 in April, and the 50.3 median estimate of economists surveyed by Bloomberg News. Numbers above 50 signal expansion. A separate gauge from HSBC Holdings Plc and Markit Economics came in at 49.2.
Chinese policy makers are considering doubling the size of a clean-up program for shaky local government finances, people familiar with the matter said. The Ministry of Finance may set additional quota of 500 billion yuan ($80.7 billion) to 1 trillion yuan for local governments to swap debt into municipal bonds, the people said. The first stage of the bond swap, currently under way, is 1 trillion yuan.
Australia’s S&P/ASX 200 Index declined 0.7 percent as banks retreated. South Korea’s Kospi index fell 0.6 percent after a report showing exports slumped by the most in almost six years. Taiwan’s Taiex Index slipped 0.8 percent.
Japan’s Topix added 0.3 percent. The Nikkei 225 Stock Average gained less than 0.1 percent. Markets in Singapore, Thailand and New Zealand are closed for holidays.
Futures on the Standard & Poor’s 500 Index rose 0.4 percent. The underlying measure declined 0.6 percent on Friday in New York as May economic data raised concern over the strength of the world’s largest economy after a first-quarter contraction.
A gauge Friday showed Chicago-area manufacturing activity contracted last month to its lowest level since February, raising concerns that the rebound from a weak first quarter lacks vitality. Data also showed gross domestic product in the U.S. shrank, amid harsh winter weather, a strong dollar and delays at ports. A separate report said consumer sentiment in May fell the most since the end of 2012.