Chinese stocks went up on Friday after the factory output saw a rise for the first time in the year as the nationwide lockdowns caused by the COVID-19 were slowly eased, easing the growing concerns of the economy and the warning around an escalation in the tensions between U.S. and China. At the midday break, the Shanghai Composite index was up by 0.2%. China’s blue-chip CSI300 index was almost flat, while the financial sector sub-index increased by 0.3%, the consumer staples sector went down by about 0.7%, and the real estate index was up by 0.3%, and the healthcare sub-index fell by around 1.2%. MSCI’s Asia ex-Japan stock index rose by about 0.4%, whereas Japan’s Nikkei index went up by 0.3%. The Yuan was weaker by 0.1% at 7.1010 per U.S. dollar.
So far, the Shanghai stock index tumbled by about 5.7%, whereas the H-share index dropped by 13%. Shanghai stocks increased by 0.5% this month but also lost about 0.7% so far this week. The industrial output in China rose by a significant 3.9% in April, compared to a forecasted 1.5% increase, according to analysts. However, the consumption still remained weak, with retail sales falling by nearly 7.5%. The Central Bank of China surprisingly kept the interest rate on its medium-term funding for financial institutions to remain steady on Friday. Authorities have now stepped up to the pace of monetary easing required to combat and revive the economic slowdown.
According to analysts, historically, A-shares have typically reacted positively to macro policy announcements. At the same time, their resilience against the FX volatility and low foreign ownership will also help as uncertainty gradually unfolds the trade tension on the front. On the other hand, U.S. President Donald Trump stated he has no interest in sspeaking to Chinese President Xi Jinping at the moment and hinted that he could even cut ties with the world’s second-largest economy as the outbreak cast a pall over the January trade deal with Beijing.