Stocks gain ground after new stimulus plan

China’s stock markets gained ground on Wednesday following a stimulus plan for the country's semiconductor industry.

The benchmark Shanghai Composite Index rose 0.17 percent to close at 3,377.56, after being pulled lower by financial stocks.

The smaller Shenzhen Component Index climbed 0.72 percent to finish at around 13,960.93, while the ChiNext Index gained 0.97 percent to end its trading day at 2,860.24.

Combined turnover on the two bourses came to 1.19 trillion yuan (US$171 billion), compared with 1.33 trillion yuan in the previous session.

Markets saw broad-based gains, with national defense companies, semi-conductors and gold shares performing strongly.

The State Council issued a document outlining new policies to spur the development of the domestic integrated circuit industry.

They include measures related to taxation, investment, research and development, as well as imports and exports.

One measure is a 10-year income tax exemption to support the development of advanced technology enterprises that produce semiconductors of 28nm and below.

On Wednesday, the Caixin/Markit non-manufacturing Purchasing Manager’s Index fell to 54.1 in July, dropping from a peak level of 58.4 in June.

The reading is also in line with the official PMI reading for the services sector, which fell to 53.1 in July from 53.4 in June. 

The decline suggests the world's second-largest economy’s service activity rose at a slower pace, likely due to severe floods and a resurgence of COVID-19 clusters in some cities, according to a report by HSBC’s global research teams.

The bank expects a continued recovery in service activity in the coming months on the back of policy support and reopening of more services sectors.