China’s main stock indexes hit seven-year closing highs on Thursday despite a weak factory activity survey, and intense buying pushed Shenzhen’s start-up board ChiNext up more than 3 per cent to another record.
Chinese factory activity contracted for the third month in May and output shrank at the fastest rate in just over a year, HSBC’s China May flash factory PMI showed.
But feverish investors were buying on bad news, interpreting the weak number as suggesting China will unveil more policy support.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 1.8 per cent to 4,840.98, while the Shanghai Composite Index gained 1.9 per cent to 4,529.42 points.
The Nasdaq-style, tech-heavy ChiNext, surging nearly 150 per cent this year, showed no signs of taking a breather, even though its price-earnings ratio has topped 100.
Shares of Chinese electric carmaker BYD Co Ltd surged by their 10 per cent limit, with analysts saying the stock is reacting to the central government’s ‘Made in China 2025’ plan to promote global champions.
China Cosco Holdings Co Ltd and China Shipping Development Co also shot up 10 per cent, after the two firms set up a joint venture, China Ore Shipping, in Singapore to buy four ships from Brazil’s Vale.