Chinese Stocks Rise as H-Shares Gauge Rebounds from Six-Year Low

Chinese stocks rallied, spurring a rebound for the benchmark gauge in Hong Kong from a six-year low, as energy producers surged on higher oil prices and after the government signaled it will curb overcapacity in industries such as coal that have been dragging down economic growth.

The Hang Seng China Enterprises Index jumped 3.4 percent at the close, the biggest gain since October. PetroChina Co. and China Shenhua Energy Co., the largest Chinese oil and coal producers, climbed more than 7 percent. Premier Li Keqiang called for supply-side reforms in the steel and coal industries, while the Economic Information Daily reported the government will provide 100 billion yuan ($ 15 billion) a year to help reduce capacity in those sectors. The Shanghai Composite Index rose 1.3 percent, halting a three-week losing streak.

Chinese stocks are joining a global rebound for equities after the European Central Bank signaled it may boost stimulus and crude oil nudged $ 30 a barrel. There’s speculation the Chinese government will continue to prop up mainland equities after Vice President Li Yuanchao’s comments, according to IG Asia Pte. China is willing to keep intervening in the stock market to make sure a few speculators don’t benefit at the expense of regular investors, Li said in an interview at the World Economic Forum in Davos, Switzerland.

Source: bloomberg

MARKET

Japan Stocks Fall After China Factory Gauge Signals Contraction

Japanese stocks fell, after the Topix index posted its steepest monthly gain since April 2013, as a China factory gauge signaled a third month of contraction. Non-ferrous metal producers led declines.

The Topix retreated 1.2 percent to 1,538.97 as of 9:00 a.m. in Tokyo, after surging 10 percent last month. The Nikkei 225 Stock Average lost 1.3 percent to 18,844.69 on Monday. The yen traded at 120.51 per dollar, strengthening for a second day after the Bank of Japan held off from adding to monetary easing on Friday. China’s official factory gauge — the first key economic indicator for this quarter — came in at 49.8 in October, missing economists’ estimates and holding below 50, the line between expansion and contraction.

China’s official non-manufacturing purchasing managers index, a barometer of services and construction, fell to 53.1 from 53.4 in September, the weakest since December 2008.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.2 percent after the underlying measure fell 0.5 percent on Friday, closing out October with an 8.3 percent gain, the best month in four years. The Stoxx Europe 600 Index advanced 8 percent, its biggest monthly rally since July 2009.

Source: Bloomberg

MARKET