Banking stocks led Monday's rebound on the Shanghai Composite after an early dip, China Global Television Network (CGTN) analyst Timothy Pope said.
Chinese mainland markets opened lower but rebounded after the lunchtime break, with the Shanghai Composite closing 0.86 percent higher, while the Shenzhen Component and ChiNext each added less than half a percent.
"The initial falls came after the latest PMI data, which pretty much matches what we know about the economy -- and the stock markets -- at the moment. High-tech manufacturing, AI-linked industries and exports all doing relatively well, while much of the rest of the economy is lagging. The headline manufacturing PMI improved, as we've just been discussing, to 49.8, which is very close to expansion, but we saw the smaller companies, construction and services remaining particularly weak," said Pope.
Pope said the rebound was fueled by banking stocks, which rallied after China's big five lenders posted solid first‑half earnings.
"Banking stocks today were fairly strong right from the start after the big five Chinese banks posted their first-half earnings after the market closed on Friday. Profit growth was pretty good at all five, but more importantly net interest margins improved three out of the five, and the average net interest margin for the sector as a whole actually went up for the first time since 2022, as old term deposits matured and they were replaced by newer, cheaper ones. Credit demand remains a bit of an issue for the sector though, and there isn't much sign of improvement there at the moment. But we saw -- Bank of China, ICBC and Agricultural Bank of China -- the three biggest contributors to gains on the Shanghai Composite today," said Pope.
Banking stocks fuel rebound on Shanghai Composite after weak open: analyst
