China's A shares jumped on Monday, the first trading day of the second half of the year, on strong performance by market heavyweights.
Experts said the bullish sentiment was supported by
The benchmark Shanghai Composite Index rose 1.31 percent to close at 3,243.98 points, while the Shenzhen Component Index gained 0.59 percent to end the day at 11,091.56 points. The total trading value of the Shanghai and Shenzhen bourses stood at 1.02 trillion yuan ($140 billion).
There was a net inflow of 2.69 billion yuan in northbound capital, which refers to the amount overseas investors put into the A-share market via a stock connect program linking the Shanghai, Shenzhen and Hong Kong exchanges.
A robust performance by financial services providers, perennial market heavyweights, contributed to Monday's rally.
A-share insurance companies reported the biggest daily increase of 4.63 percent on average. Bank shares rose 1.45 percent on average, while stock prices of securities brokerages rose 1.38 percent.
Other market heavyweights, such as listed airport management providers, reported an average increase of 4 percent, while shares of hotel companies climbed 3.95 percent.
The Caixin China General Manufacturing Purchasing Managers' Index, which updated its numbers on Monday, came in at 50.9 for June. Though the reading fell from 51.3 in May, it has remained in expansion territory for a second consecutive month.
The better-than-expected Caixin PMI data in June translated into an overall buoyant sentiment on the A-share market on Monday and may lead to a bullish stock market in July, said Li Daxiao, chief economist of Yingda Securities.
Listed carmakers surged 4.34 percent on average, with these companies witnessing the biggest daily capital inflow of 2.35 billion yuan on Monday.
According to data released by the China Automobile Dealers Association on Friday, 1.85 million passenger cars were sold in June, 5.7 percent higher than the month before.
Whole-year sales of passenger cars are expected to grow positively this year, the association said.
Analysts from Shenyin Wanguo Securities said a price war waged by carmakers has started to subside since April and pent-up demand from consumers is likely to be released.
Combined with a number of stimulus measures, car consumption will pick up, benefiting shares of automotive companies.
Trading in new energy firms remained active, with nearly 1.35 billion yuan of capital inflow seen on Monday.
Shares of glass fiber provider Shandong Jinjing (Group) Co Ltd and wind power equipment supplier Dajin Heavy Industry surged by the daily limit of 10 percent.
A-share prices of new energy companies have been overly slashed in recent months and the sector is expected to bounce back, said Wang Liying, chief wealth consultant at Orient Securities in Beijing.
