Chinese Stocks On Fire After Country Posts Biggest Growth In Manufacturing Activity In 10 Years

On Wednesday, the U.S. markets responded positively to news of China's manufacturing sector quickly recovering after years of strict COVID-Zero policies.

ETFs following the Chinese economy as well as key Chinese companies listed in the U.S. all jumped in price on Wednesday.

Official figures put China's manufacturing sector at its fastest growing pace in ten years.

What Happened: China's National Bureau of Statistics published the country's Purchasing Managers Index on Wednesday. Purchasing managers' indexes are used as key indicators of a country's economic activity.

In February, China's PMI for manufacturing hit 52.6%. If the index is below 50%, it signals that manufacturing activity is contracting. Numbers above the 50% mark translate to growth.

China lifted its COVID-Zero policies earlier this year. The country's PMI for January — the first month after relieving COVID measures — barely surpassed the growth mark, at 50.1%.

February's report added 2.5% over last month's activity. Among the 21 industries surveyed, 18 were in the expansion range. That's seven more than the previous month.

Non-manufacturing business activity was also on the rise in February, with its index reaching 56.3%, 1.9 percentage points over January.

Key industries including equipment manufacturing and high-tech manufacturing were above the overall average, at 54.5% and 53.6%, respectively. Consumer goods was lower than the average at 51.3%.

Impact On Stocks: ETFs following the Chinese markets jumped on the news, which was published overnight, as markets opened.

• iShares MSCI China ETF MCHI jumped 3.7% on Wednesday.
• KraneShares CSI China Internet ETF KWEB jumped by 4.1%.
• Xtrackers Hvst CSI 300 China A-Shs ETF ASHR rose by 3.6%.

Chinese companies listing either common stocks or American depositary shares in U.S. exchanges also got a significant boost from the new data.

• Alibaba Group Holding Ltd BABA was up 2.4%.
• PDD Holdings Inc PDD was up 4.1%
• JD.Com Inc JD was up 2.4%.
• NetEase Inc NTES was up 5.1%
• Baidu Inc BIDU was up 3.7%.

The Hang Seng Index, following the largest companies listed in the Hong Kong Stock Exchange, jumped by 4.2% while the SZSE Component Index (following the Shenzhen Stock Exchange) and the SSE Composite Index (following the Shanghai Stock Exchange) both jumped by over 1%.

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