Chinese Stocks Rise for Second Day as Volatility, Trading Slump

The Good, Bad and Ugly on China's Economy
  • Technology, telecommunication shares climb in mainland trading
  • Price swings in Shanghai Composite tumble to 15-month lows

Chinese stocks rose for a second day, with volatility plunging to 15-month lows, as investors sought companies least exposed to a slowdown in the manufacturing economy.

The Shanghai Composite Index advanced 0.6 percent at the close, led by technology, phone and consumer-staples companies. Price swings in the benchmark gauge slumped to the lowest levels since March 2015 as interest in trading continued to dwindle. Trading volumes in the mainland and Hong Kong were at least 27 percent below the 30-day average. Goertek Inc. and Han’s Laser Technology Industry Group Co. rose after a media report that Apple Inc. asked suppliers to prepare production of a new version of its smartphones.

Chinese equities, known for their stomach-churning volatility during a recent speculative boom and bust, have been stuck in range-bound trading this month amid concern about the sustainability of the nation’s economic growth. Suspected buying by state-backed funds aimed at preventing the Shanghai index from ending below 2,800 has offset selling amid gloomy data and a weaker yuan, according to Shanghai Bingsheng Asset Management.

“The market is still in a long-term downtrend and rebounds tend to be short and unsustainable,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai.

Technology, Staples

The Shanghai Composite climbed to 2,843.65. The small-cap ChiNext index jumped 1.6 percent. The Hang Seng China Enterprises Index rose 0.1 percent in Hong Kong, while the Hang Seng Index slipped 0.2 percent.

Gauges of telecommunication, technology and consumer-staples companies in the CSI 300 Index rose at least 0.8 percent for the steepest gains among 10 industry groups, while the large-cap measure added 0.3 percent.

The China Minxin Manufacturing Index slid 1.1 percentage points to 45.8 in May from the previous month, according to a private survey conducted by China Minsheng Banking Corp. and China Academy of New Supply-side Economics and released over the weekend.

China’s traders are continuing to pile into producers of meat and alcohol on bets such companies will endure a deepening slowdown. Henan Shuanghui Investment & Development Co., a producer of frozen foods, jumped 2.3 percent. Kweichow Moutai Co., the biggest producer of Moutai liquor, rose for a third day, adding 1.2 percent.

Apple suppliers Goertek and Han’s Laser advanced at least 1.3 percent. The U.S. smartphone maker asked suppliers to prepare for an output of 72 million to 78 million units of the iPhone 7 series by the end of 2016, the highest target in about two years, Taiwan’s Economic Daily reported, citing unidentified suppliers it surveyed in China.

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