China stocks edge higher as manufacturing activity returns to growth

SHANGHAI: China stocks ended slightly higher on Thursday, led by property shares, as the country’s manufacturing activities returned to growth in October, while traders await a key leadership meeting for details on more potential stimulus. Hong Kong shares closed down.

China’s blue-chip CSI300 Index closed roughly flat, while the Shanghai Composite Index rose 0.4%. Hong Kong’s benchmark Hang Seng index edged down 0.1%.

China’s manufacturing activity in October expanded for the first time in six months, an official factory survey showed.

“I expect the economic momentum to improve moderately in Q4 as monetary and fiscal policies loosened,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“We will find out more hints from Beijing on the policy outlook after the U.S. election.”

Property shares led the gains in both onshore and offshore markets, up 3.2% and 1.4%, respectively.

Investor sentiment towards China’s equity market has cooled since mid-October, following a sharp rally in late September. Market focus is now on next week’s National People’s Congress Standing Committee (NPCSC) meeting and the U.S. election.

“China onshore mutual fund investors think it’s difficult to set up a huge size fiscal stimulus target which will break deficit in short term,” UBS analysts said in a note to investors.

In the NPCSC next week, the sustainability and transparency of fiscal policy will be more important to sustain the upward equity market trend, the analysts from UBS said, adding that investors think more meaningful fiscal policy should be released at the Central Economic Work Conference in December.

Meanwhile, Reuters reported that China had told its automakers to halt big investment in European countries that support extra tariffs on Chinese-built electric vehicles.

Shares of Chinese electric-vehicle maker BYD ended lower in both China and Hong Kong, even as the company posted an 11.5% rise in its third-quarter net profit on Wednesday and its quarterly revenue outpaced Tesla for the first time. – Reuters