Shanghai index hits near four-month high

Tracy Li
Chinese stock market closes the week sharply higher as investor optimism is raised by private survey showing the services sector grew at its fastest pace in over a decade in June.
Tracy Li

The Chinese stock market closed the week sharply higher on Friday as upbeat economic data raised investors’ optimism.

The benchmark Shanghai Composite Index carried its four-day winning streak and skyrocketed 2.01 percent to close at 3,152.81, a near four-month high, following gains from securities brokers, travel firms, hotels and insurance companies.

The smaller Shenzhen Component Index gathered 1.33 percent to finish at around 12,433.26, while the ChiNext Index collected 1.57 percent to end its trading day at 2,462.56.

Combined turnover on the two bourses came to 1.17 trillion yuan (US$165.5 billion), compared with 1.08 trillion yuan in the previous session.

Among the actives, the leisure service sector led the gains. Uzai.com, an online travel agency, saw its shares jump by the limits to close at 8.44 yuan per share.

Markets are trading in consolidating patterns and investors’ risk appetite grew as a private survey showed China’s services sector grew at its fastest pace in over a decade in June.

The Caixin/Markit services Purchasing Manager’s Index (PMI) came in at 58.4 for the last month, the highest reading since April 2010.

As the Caixin services PMI survey mainly covers small and medium-sized enterprises in the services sector, the June rise may represent a delayed recovery of small businesses, which may have suffered more from the COVID-19 shock and its ripple effects, Nomura cautioned in a research note.

The proposed Wealth Management Connect scheme, which was announced earlier this week, will be a major catalyst for the Greater Bay Area, said the UBS chief investment office.

The measure will be a key component for expanding cross-border financial services and accelerate the region’s connectivity, it noted.

Under the scheme, Hong Kong and Macau residents can buy onshore wealth management products sold by Chinese financial institutions, while residents of the GBA in China can buy wealth management products sold by financial institutions in Hong Kong and Macau.

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