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China Stocks end mixed

01-Dec-23 15:17 Hrs IST

Mainland China share market finished session mixed on Friday, 01 December 2023, as risk sentiments grappled with conflicting factory activity data, with a sharper-than-anticipated contraction in the official monthly manufacturing activity index, while private gauge indicated improvement.

At close of trade, the benchmark Shanghai Composite index was up 0.06%, or 1.96 points, to 3,031.64. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.25%, or 4.77 points, to 1,887.98. The blue-chip CSI300 index declined 0.38%, or 13.32 points, to 3,482.88.

Investor sentiment turned cautious following the release of the official PMI data on Thursday, showing factory activity shrinking at a faster pace in November versus the previous month. China's official manufacturing PMI shrank to 49.4 in November from 49.5 in October

This data contradicts the more recent Caixin/S&P Global manufacturing purchasing managers' index (PMI) survey released on Friday, showing Manufacturing PMI surged to a three-month high of 50.7 in November, up from 49.5 in October.

ECONOMIC NEWS: Chinese manufacturing firms signalled a fresh improvement in the health of the sector during November, according to the latest PMI data. A sustained rise in new orders helped to lift factory production for the third time in the past four months, albeit marginally. New export business fell slightly, however, with firms often linking this to subdued global demand conditions. At the same time, manufacturers registered only a marginal drop in staffing levels and a slight rise in purchasing activity, as confidence around the year-ahead ticked up. On the inflation front, average input costs rose at a modest pace that remained much slower than the series average, while selling prices were broadly unchanged. The headline seasonally adjusted Purchasing Managers? Index (PMI) increased from 49.5 in October to a three-month high of 50.7 in November, to signal a renewed improvement in manufacturing conditions. Though only marginal, it marked the third time in the past four months that the health of the sector has strengthened. Supporting the above 50.0 PMI figure was a sustained and quicker rise in overall new business received by Chinese goods producers in November. The further increase in total new orders prompted firms to expand their production schedules after a slight reduction in October. In line with the trend seen for output, purchasing activity also returned to expansion in November. Supply chain performance meanwhile improved slightly for the second month in a row. The weaker reduction in staffing levels coincided with an improvement in business confidence midway through the final quarter of the year. Prices data indicated that cost pressures remained subdued in November, with average input costs rising at a modest pace that was slower than in October.

CURRENCY NEWS: China's yuan was down changed against the dollar on Friday following weaker guidance from the central bank. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1104 per U.S. dollar, 86 pips weaker than the previous fix 7.1018. In the spot market, the onshore yuan CNY=CFXS yuan was changing hands at 7.1388 at midday, 38 pips weaker than the previous late session close.