Chinese Equity Markets Leading Strongly for Thursday's Trading Activities
China's Trade Surplus Shows Growth Amidst Global Recovery
The Shanghai Composite Index (SCI) is poised for a higher opening on Thursday, following a positive lead from Wall Street. Despite a slight dip in crude oil prices, China's economy continues to show signs of recovery, as indicated by the July trade data.
China's exports grew by approximately 7.2% year-on-year (YoY), marking a faster export growth rate compared to June 2021. Imports also saw an increase of approximately 4.1% YoY, which was unexpected, as forecasts predicted a decline or minimal growth. This resulted in a trade surplus of around USD 98.2 billion, slightly less than market expectations but higher compared to the previous year.
The increase in exports was supported by robust shipments to markets outside the U.S., including Africa, Europe, and Latin America, and a notable surge in chip exports by nearly 30% YoY. However, exports and imports with the United States declined by about 21.7% and 18.9%, respectively.
In Chinese Yuan terms, the trade surplus also expanded from previous months, with a surplus of CNY 705.1 billion in July, up from CNY 585.96 billion previously.
The SCI finished modestly higher on Wednesday, gaining 16.40 points or 0.45%. Notable movers included Bank of Communications, which shed 0.64%, China Life Insurance, which collected 0.65%, and Jiangxi Copper, which spiked 2.57%. Bank of China perked 0.18%, Agricultural Bank of China strengthened 1.22%, while China Merchants Bank dipped 0.29%.
Other significant events in the global market include the S&P 500 gaining 45.87 points or 0.73%, closing at 6,345.06. The NASDAQ Composite rallied 252.87 points or 1.21%, ending at 21,169.42. Tech shares are expected to lead the way higher in Asian markets, with optimism over earnings.
In corporate news, Apple (AAPL) announced plans to invest $100 billion to expand its U.S. operations and increase its total investment in the U.S. over the next four years to $600 billion. McDonald's (MCD) reported second quarter results that exceeded estimates on both the top and bottom lines, while Disney (DIS) reported mixed third quarter results. Shopify (SHOP) also beat the street in its second quarter results, and Snap (SNAP) and Super Micro Computer (SMCI) reported mixed third quarter results.
The global markets forecast for Asian markets is positive, with optimism over earnings. The China stock market has risen for three consecutive sessions, gaining approximately 75 points or 2.2%. However, Russia faces a threat of U.S. sanctions on its oil exports after August 8 if it fails to end its attempt to annex Ukraine.
Later this morning, China will release July figures for imports, exports, and trade balance, which will provide further insights into the country's economic performance.
Investors may find opportunities in the stock-market as the Shanghai Composite Index (SCI) is expected to rise following a positive lead from Wall Street. The increased trade surplus of around USD 98.2 billion, as a result of robust exports and surprising increases in imports, indicates a strong performance in China's finance sector.
