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Hong Kong - Chinese stocks in Hong Kong headed for their steepest weekly advance in four months, extending gains after a report showed the nation’s economy expanded more than expected in the second quarter.
The Hang Seng China Enterprises Index increased 0.9% at the noon break, taking its rise since July 8 to 6.5%. BYD jumped the most in five months after Samsung Electronics said it’s in talks to invest in the Chinese electric carmaker.
The Shanghai Composite Index was set for a third weekly advance. China’s gross domestic product rose 6.7% in the three months through June, exceeding estimates for a 6.6% expansion, while aggregate financing jumped.
The data added to signs of a recovery in China’s economy, with lending and consumer spending perking up in June in response to stepped up monetary and fiscal policy support.
A surge in aggregate financing, the broadest measure of new credit, in June suggests cash taps remain open as the central bank seeks to prop up growth. Speculation that policy makers will boost stimulus has underpinned equities in recent weeks, with mainland shares ranking among the world’s best performers since Britain’s June 23 vote to leave the European Union.
“The market has been more positive about equities because global liquidity is ample and economic data are improving,” said Peter So, co-head of research at CCB International Securities in Hong Kong. “But after rising quickly recently, further gains are meeting resistance.”
The Hang Seng China gauge traded at 9 090.22, after rising every day this week. The Hang Seng Index increased 0.6%. The Shanghai Composite slipped 0.1%, paring its weekly gain to 2.2%.
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The second-quarter GDP growth is in line with the government’s target of at least 6.5% for the full year. Industrial production increased 6.2% in June from a year earlier, compared with 6% in May and economists’ projections for 5.9%. Retail sales rose 10.6%, versus the median estimate for 9.9%.
Aggregate financing rose to 1.63 trillion yuan in June compared with forecasts for 1.1 trillion yuan. New yuan loans climbed to 1.38 trillion yuan, versus an estimate for 1 trillion yuan.
China’s factory-gauge deflation eased for a sixth straight month in June, while exports and imports declined to signal weak demand at home and abroad, according to data released over the past week.
“The GDP number is in line with general expectations,” said Chen Xingdong, the chief China economist at BNP Paribas SA in Beijing. “The government is unlikely to pursue monetary easing in any active way. Whether China can achieve its growth target this year depends on a lot of private-sector investments, which are under downward pressure.”
BYD surged 5.7%, heading for its highest level since June 2015. Investing in the company would bolster Samsung’s semiconductor business for cars, the South Korean company said on Friday in an emailed statement. Details including the size of the investment will be disclosed when they’re confirmed, Samsung said.
