China Market surges on policy support hopes; eyes on NPC session

Mainland China share market finished session higher on Friday, 01 March 2024, on hopes Beijing to roll out more stimulus measures after an official survey showed China's manufacturing activity in February shrank for a fifth straight month.

The official manufacturing purchasing managers' index (PMI), compiled by the National Bureau of Statistics (NBS), fell to 49.1 in February from 49.2 in January. However, a survey by the Caixin/S&P Global released just after the official PMI showed manufacturing activity expanded steadily at 50.9, up from 50.8 in January. Taken together, the PMIs highlighted an uneven economic recovery, maintaining pressure on authorities as markets clamor for bolder stimulus measures and reforms to safeguard China's long-term growth potential.

Market participants cautiously awaiting for next week's annual session of the National People's Congress, where the annual growth target will be set and a plan will be laid out for achieving it.

At close of trade, the benchmark Shanghai Composite index surged 1.94%, or 57.32 points, to 3,015.17. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added spurted 3.36%, or 55.49 points, to 1,706.96. The blue-chip CSI300 index climbed up 1.91%, or 65.82 points, to 3,516.08. For the month, the CSI 300 was up 8.3%

ECONOMIC NEWS: China NBS Manufacturing PMI Falls In February- The manufacturing sector in China continued to contract in February, and at a slightly faster rate, the latest survey from the National Bureau of Statistics revealed on Friday with a manufacturing PMI score of 49.1. That's down from 49.2 in January, and it moved further beneath the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the non-manufacturing PMI climbed to 51.4 from 50.7 in the previous month, while the composite index was unchanged at 50.9.

China Manufacturing Sector Accelerates In February- The manufacturing sector in China continued to expand in February, and at a slightly faster rate, the latest survey from Caixin revealed on Friday with a manufacturing PMI score of 50.9. That's up from 50.8 in January, and it moved further above the boom-or-bust line of 50 that separates expansion from contraction. Helping to nudge the headline index higher was a slightly quicker rise in manufacturing production across China during February. Though modest, the rate of output growth was the fastest seen since May 2023, with companies generally attributing this to a sustained improvement in market conditions and greater new order volumes. The total amount of new work placed with Chinese goods producers also rose at a quicker pace in February, albeit one that remained marginal overall. The upturn was partly driven by a second successive monthly increase in new export business, albeit only slight, with firms citing an improvement in underlying global demand conditions.

CURRENCY NEWS: China's yuan eased against the dollar on Friday. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1059 per dollar, 23 pips weaker than the previous fix of 7.1036. In the spot market, the onshore yuan CNY=CFXS yuan was changing hands at 7.1947 at midday, 69 pips weaker than the previous late session close.

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