Chinese stocks surged on Monday, marking their most significant gain in over a month fueled by a robust resurgence in manufacturing activity, which bolstered optimism among foreign investors.
At the midday trading break in Shanghai, the CSI 300 Index, representing the country’s top companies, surged by 1.5 percent to reach 3,591.61, the most substantial leap since February 29. Similarly, the Shanghai Composite Index rose by 1 percent. Meanwhile, financial markets in Hong Kong remained closed for the Easter holiday, set to reopen on Tuesday.
Leading the charge in this rally were electric vehicle (EV) makers and battery materials producers. Notable gains were observed with BYD climbing by 3.4 percent to 209.89 yuan, Great Wall Motor advancing by 4.5 percent to 23.86 yuan, and Contemporary Amperex surging by 4.1 percent to 197.97 yuan. Ganfeng Lithium and Tianqi Lithium also saw significant increases, rising by 8.3 percent to 39.37 yuan and 5.9 percent to 50.79 yuan respectively. Additionally, liquor distillers showed notable gains, with Luzhou Laojiao jumping by 4 percent to 191.93 yuan.
The positive momentum was fueled by China’s official Purchasing Managers’ Index (PMI) for manufacturing, which climbed to 50.8 in March from 49.1 in February, according to data released by the statistics bureau on Sunday. This reading exceeded market expectations of 50.1 and marked the end of a five-month contraction in factory activity. A separate report by Caixin/S&P Global revealed that the manufacturing index rose to 51.1 in March, surpassing analysts’ forecasts.
Zhang Xingyao, a strategist at China Industrial Securities, noted the emergence of positive signs, attributing them to the improved expectations for domestic fundamentals and policies, supported by the encouraging data and measures introduced.
The CSI 300 Index has seen a 3.1 percent increase year-to-date through March 31, breaking a three-quarter losing streak to post its best quarter in a year. Market analysts attribute this turnaround to state-fund market intervention, policy support from Beijing, and regulatory actions aimed at curbing short-selling.
Offshore funds demonstrated increased interest, with Stock Connect data revealing that they purchased 22 billion yuan (US$3 billion) worth of yuan-denominated stocks in March. This followed a net buying of 60.7 billion yuan in February, ending a six-month exodus from the onshore market.
Elsewhere in Asia, market movements were mixed on Monday. Japan’s Nikkei 225 experienced a 1.5 percent decline, while South Korea’s Kospi added 0.3 percent. Australian financial markets remained closed for the Easter break.
