Shanghai stock soar on strong factory data, trade optimism

China's benchmark Shanghai Composite index see-sawed in a tight range on Tuesday before closing at a new 10-month high as investors cheered this week's manufacturing data, and maintained optimism about policy easing and U.S.-China trade talks.

At the close, the Shanghai Composite index was up 0.2 per cent at 3,176.82 after bobbing in and out of the red. It was the highest close for the index since May 22, 2018. The blue-chip CSI300 index, which also swung between losses and gains throughout the day, closed 0.07 per cent lower after touching a fresh one-year intraday high.

While its financial sector sub-index rose by 0.16 per cent, the consumer staples sector fell 1.06 per cent, the real estate index lost 0.44 per cent and the healthcare sub-index ended down 0.83 per cent.

Even after trimming its gains, the CSI300 has gained nearly 32 per cent this year, while the Shanghai stock index is up more than 27 per cent. Chinese A-shares have been supported by a number of factors, including stronger manufacturing data released on Monday, an improved outlook for U.S.-China trade talks and credit growth, abundant liquidity, and investors' expectations of an imminent cut to banks' reserve requirement ratios, Gao Ting, head of China Strategy at UBS Securities, said in a note.

Giving a further boost to trade sentiment, both the United States and China have reported progress in talks aimed at ending their trade war. A Chinese trade delegation led by Vice Premier Liu He will visit Washington for the newest round of talks starting on Wednesday. The smaller Shenzhen index ended up 0.11 per cent and the start-up board ChiNext Composite index was weaker by 0.383 per cent.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.14 per cent, while Japan's Nikkei index closed down 0.02 per cent. At 07:15 GMT, the yuan was quoted at 6.7227 per U.S. dollar, 0.15 per cent weaker than the previous close of 6.7125. The largest percentage gainers on the main Shanghai Composite index were AVIC Capital Co Ltd, up 10.08 per cent, followed by Dalian Thermal Power Co Ltd, gaining 10.07 per cent, and Asian Star Anchor Chain Co Ltd Jiangsu, up by 10.04 per cent.

The largest percentage losers on the Shanghai index were Hangzhou TianMuShan Pharmaceutical Enterprise Co Ltd, down 9.99 per cent, followed by Nanjing Xinjiekou Department Store Co Ltd, losing 6.12 per cent, and Zhejiang Jiecang Linear Motion Technology Co Ltd, down by 5.35 per cent.