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Shanghai - China’s stocks rose, extending their advantage as one of the world’s best performers since the UK’s shock vote to leave the European Union, as the market’s dominance by local traders helped insulate the nation’s shares from global turmoil.
The Shanghai Composite Index advanced 0.5%, taking its rally since the start of Friday to 1.2%, the most among 94 benchmark indexes tracked by Bloomberg after the Jakarta Composite Index.
Drug makers, industrial and technology companies have led gains in Shanghai over the period, with traditional medicine maker Beijing Tongrentang climbing 7.9%.
The MSCI All-Country World Index has tumbled 4.9% during the span.
The gain is some respite for China’s battered traders, who’ve endured a 44% plunge by the Shanghai index since last year’s peak and MSCI’s refusal this month to add the nation’s shares to benchmark gauges.
Local individuals account for about 80% of trading, with foreign investors limited by quotas from buying and selling mainland equities.
"China’s market is still a semi-closed one that isn’t subject to too much in the way of fund outflows," said Wei Wei, an analyst at Huaxi Securities in Shanghai.
The Shanghai Composite rose to 2 926.84 at 1:25 p.m. The Hang Seng Index climbed 0.6% paring losses in June to 2.5%, as Cheung Kong Property Holdings Ltd. and Bank of East Asia rallied 2.5%.
The Hang Seng China Enterprises Index dropped 0.5% on declines by Industrial & Commercial Bank of China, Bank of Communications and Agricultural Bank of China as their shares traded without the rights to a dividend.
Southbound quota
Mainland buying of Hong Kong shares via an exchange link with Shanghai has accelerated in the past two months, with the total available quota dropping below 25% of the aggregate limit of 250bn yuan ($38bn).
China restricts the access foreigners have to its yuan-denominated shares, with only those with approved investment quotas allowed to buy or sell shares. As of the end of May, 273 global investors were granted quotas for $81.1bn under the qualified foreign institutional investor, or QFII, system, according to the nation’s foreign-exchange regulator.
That’s about 1.3% of China’s market capitalisation.
China Shipbuilding Industry Company advanced 4.9% in Shanghai on Wednesday, pacing gains for industrial companies, as the stock resumed trading for the first time in more than three weeks.
The shipbuilder plans to raise as much as 3.9bn yuan through a private share sale to its parent and two affiliates to reduce debt, according to an exchange statement.
China Railway Group and China Railway Construction Corporation climbed at least 6.5%.
Economic data
CK Hutchison Holdings, which generated 37% of its total earnings before interest and taxes from the UK last year, rose 0.7% in Hong Kong, while London-based Standard Chartered advanced 1.3%.
China will kick off the release of June economic data on Friday, starting with the purchasing managers’ index. The manufacturing gauge will probably show a reading of 50, the dividing line between expansion and contraction, according to the median of estimates in a Bloomberg survey. That compares with 50.1 in May.
Hong Kong’s markets will be closed on Friday for a public holiday.
