China Stocks Cap Longest Winning Run Since June as Curbs Eased

  • CSI 300 Index climbs 1.6% to its highest close since April 19
  • Shanghai lockdown easing, increase in PMI boost sentiment

Chinese stocks rose for a fifth day after the financial hub of Shanghai further eased virus-related curbs and data showed a gradual improvement in the nation’s factory activity.

The CSI 300 Index closed 1.6% higher, leading gains in Asia and capping its longest rising streak since June last year. Foreign investors snapped up a net 13.9 billion yuan ($2.1 billion) of mainland shares via trading links on Tuesday, the second-largest daily inflow this year, according to data compiled by Bloomberg.

Some optimism is returning to China’s battered stock market as investors bet that easing Covid outbreaks will provide authorities more room to lift strict curbs that have stifled growth. Shanghai will resume road and public transportation from Wednesday in a major step toward full reopening. Meanwhile, latest data showed China’s daily virus cases fell below 100 for the first time since early March.

“We don’t see the news getting much worse from here,” David Wong, senior investment strategist at AllianceBernstein Hong Kong Ltd., said in a Bloomberg Television interview earlier on Tuesday. “It is very clear that the policy support is on its way.”

The latest developments come after Beijing has been trying to support growth through a variety of measures. The government recently rolled out a broad support package that covered everything from consumption and investment to tax cuts and loan support.

Data early on Tuesday showed the official manufacturing purchasing managers index rose to 49.6 in May from 47.4 in April. While the below-50 reading still indicates a contraction, it compares with the median estimate of 49 in a Bloomberg survey of economists.

The CSI 300 Index ended May with a gain of 1.9%, its best monthly advance this year. Yet year to date, it has lost more than 17%, underperforming the broader Asia benchmark, which is down about 12%.

A less worse-than-expected set of data prompted the rally in China equities, “holding the promise of an accelerating recovery in June if the virus situation remains benign,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte., wrote in a note.

Authors: Shikhar Balwani, Charlotte Yang, Bloomberg

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