Chinese Stocks Rise Again On the Heels of Inflation Data

August 9, 2016, 7:26 AM UTC
Shanghai Composite Index Reaches Above 3,000 Points On Tuesday
FUYANG, CHINA - JULY 05: An investor reacts at an exchange hall on July 5, 2016 in Fuyang, Anhui Province of China. The Shanghai Composite Index rose 17.79 points, or 0.60% to 3,006.39 points. The Shenzhen Composite Index dropped 7.09 points, or 0.07% to 10,602.77 points. (Photo by VCG/VCG via Getty Images)
VCG/ VCG via Getty Images/File

China’s blue-chip CSI300 index climbed for a sixth straight session on Tuesday, with July consumer inflation data keeping alive hopes of further monetary policy easing, while improving producer prices attracted bets on resources shares.

Both the CSI300 and the Shanghai Composite Index rose 0.7 percent, to 3,256.98 points and 3,025.68 points, respectively.

Data released on Tuesday showed that China’s consumer price inflation accelerated at its weakest pace in six months, while the long decline in upstream prices continued to moderate.

The consumer price index (CPI) rose 1.8% in July from a year earlier, while the producer price index (PPI) dropped 1.7%.

See also: China’s July Exports and Imports Fall More Than Expected

Analysts said low inflation means there’s still room for monetary easing, although Beijing will be cautious in using such tools, which have side effects, as well as limits in stimulating the economy.

Resources shares were firm as investors bet Beijing’s stepped-up efforts to reduce excess capacity would help push up commodity prices in the second half.

China-focused investment bank NSBO upgraded the steel sector to positive, citing higher demand for the metal due to rising property and infrastructure construction.

But the real estate sector, which jumped nearly 10% over the past three sessions on the back of a bidding war around major developer Vanke, was roughly flat on Tuesday as some investors took profit.