Shanghai Stock Exchange Focuses on Effectiveness of Chinese Government's Economic Stimulus Measures

Korea Economic Daily

Summary

The Chinese stock market is drawing investor attention due to US–China trade tensions, May manufacturing trends, and the effectiveness of economic stimulus measures.
It was noted that if the Caixin Manufacturing PMI to be announced on the 3rd falls below the three-month low of 50.4, there could be a significant cooling of investor sentiment.
Share price fluctuations in companies such as BYD—driven by fierce competition within China’s auto industry—are said to be having a direct impact on the Chinese stock market.

This week, the Chinese stock market is expected to experience significant volatility in the short term as trade tensions with the United States rise again. The May manufacturing data is also likely to greatly influence the direction of the Chinese stock market.

Investor attention is focused on the effectiveness of the Chinese government's economic stimulus measures. The May manufacturing trend is one of the biggest topics of the week. On the 3rd, the May Caixin Manufacturing Purchasing Managers’ Index (PMI) will be released by Chinese financial media outlet Caixin Media. According to the May manufacturing PMI from the National Bureau of Statistics of China released earlier, the market remains in a contraction phase for the second consecutive month, despite the US-China tariff truce. The Caixin Manufacturing PMI is also likely to show a similar trend. Last month, the Caixin Manufacturing PMI hit a three-month low of 50.4, and a lower figure this time could lead to a rapid cooling of investor sentiment.

Concerns are growing about cutthroat competition in China’s auto industry, which could directly impact the Chinese market, including the share price of BYD, the leading electric vehicle brand. BYD’s aggressively discounted stock tumbled about 8% at one point during intraday trading on the Hong Kong Stock Exchange last week. Shares of similar companies, such as Li Auto and Geely Automobile, also displayed a prolonged downward trend.

Beijing = Eunjeong Kim, Special Correspondent kej@hankyung.com