The Hang Seng stock index has rallied strongly and could get another boost this week.
HK50: Weekly Chart
The HK50 rallied to get a close above 20,100, and that could spark further gains in the index. The next resistance comes in ahead of 23,000.
China releases an NBS manufacturing PMI number ahead of the trading week, which could spur stock gains. Although the country’s staggered recovery has been criticised, the most recent number for manufacturing was 49, which was just below the expansionary 50 mark.
Analysts expect a reading of 49.2, but a push higher would lead to further gains for the stock market.
“This year, our production is racing to keep up with the surge in demand,” said Bai Zhiyong, general manager of Changlu Flourochemicals. “It is hard to imagine that, nearly a decade ago, we relied heavily on imported high-end chemicals.”
The purchasing managers’ index (PMI) ended a three-month decline in June, which hinted at improving factory activities and strengthening economic momentum. The PMI came in at 49 in June, up from 48.8 in May, according to NBS data.
“The PMI saw a slight increase in June, indicating that the foundation for economic recovery is continuously consolidating,” said Zhang Liqun, from the Development Research Centre of the State Council.
Zhang said the big picture for China’s economic growth has not changed, and positive factors are emerging.
The US investment bank Goldman Sachs said that hedge funds had been upping their bets on Asian equities in hopes of Chinese stimulus measures. Net foreign buying in mainland Chinese stocks via the China-Hong Kong Stock Connect programme hit 20 billion yuan for July, the highest level since April, according to official data.
