BEIJING: Shanghai stocks rose in a holiday-shortened week, with consumers leading the gains on Thursday after the central bank pledged support to ensure ample liquidity.
However, sentiment was weak as surveys showed China’s economic activity had shrunk last month.
The Shanghai Composite Index closed 0.7 percent higher at 3,067.76 points, while the blue-chip CSI300 index fell 0.2 percent to 4,010.21.
Chinese EV makers post weaker April sales due to Covid disruptions
Three of China’s most prominent electric-car makers posted a steep drop in April sales after strict measures to combat COVID-19 disrupted production and deliveries, dampening one of the world’s fastest-growing markets for the vehicles.
Xpeng Inc., NIO Inc. and Li Auto Inc. plunged by 41.6 percent, 49 percent and 62 percent respectively in April versus March, data released by the companies this week showed.
Li Auto said its manufacturing took a major hit in April because 80 percent of its part suppliers are in Shanghai and surrounding areas, where the resurgence of COVID-19 disrupted the supply chain, logistics and production.
NIO said it had paused production at its factory in Hefei on April 9 because of supply chain disruptions.
Xpeng fared better than its rivals because its factory is in China’s southern province of Guangdong, where the COVID-19 situation has been stable and restrictions lighter than in Shanghai and Jilin.
But Xpeng Chief Executive He Xiaopeng warned last month that automakers across the country might have to suspend production if suppliers in Shanghai and surrounding areas were not able to resume work.
The Chinese government has said it is trying to solve transportation bottlenecks. Shanghai authorities have drafted a list of nearly 2,000 firms, including Tesla Inc. and SAIC Motor Corp. that have priority to resume production under so-called “closed-loop” management where workers are housed at the factory sites.
However, the output from firms on the Shanghai list remains low because of a lack of workers, said Chen Yudong, the president of auto supplier Bosch China.
Toyota Motor Corp. is due to release its April sales data from China on Monday, while Tesla’s China sales are set to be disclosed next week through industry association data.
China's services activity falls at second sharpest rate on record
China’s services sector activity contracted at the second-steepest rate on record in April, as COVID-19 curbs halted the industry, leading to sharper reductions in new business and employment, a private-sector survey showed on Thursday.
The Caixin services purchasing managers’ index stood at 36.2 in April, the second-lowest since the survey began in November 2005 and down from 42 in March. The index hit a record low of 26.5 in February 2020 during the onset of the pandemic.
The 50-point mark separates growth from contraction on a monthly basis.
The pessimistic findings from the survey, which focuses more on small firms in coastal regions, are in line with the government’s official PMI, pointing to the fast deterioration in a key sector that accounts for about 60 percent of the economy and half of the urban jobs.
A sub-index for new business stood at 38.4, also the second-lowest on record and down from 45.9 the previous month, with services firms reporting the escalation of measures to contain the spread of COVID cases weighed heavily on customer demand at the start of the second quarter.
Employment also declined for the fourth straight month in April, although the drop was marginal, compared with sizeable falls in activity.
Input costs meanwhile rose at a solid pace but efforts by services firms to attract more business amid lacklustre demand drove a drop in prices charged, highlighting rising cost pressures facing services providers.
“Demand was under pressure, external demand deteriorated, supply shrank, supply chains were disrupted, delivery times were prolonged, backlogs of work grew, workers found it difficult to return to their jobs, inflationary pressures lingered, and market confidence remained below the long-term average,” said Wang Zhe, senior economist at Caixin Insight Group.
Caixin’s April composite PMI, which includes both manufacturing and services activity, slumped to 37.2 from 43.9 from the previous month.
The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.
(With input from Reuters)
