10:00 AM New York, 10:00PM Hong Kong – Stocks in Shanghai and Hong Kong surged after China reported third successive monthly expansion in manufacturing. The gain set-off a strong rally that expanded to the region and bolstered indexes in Europe and later in the U.S.

Investors bid up stocks after manufacturing expanded for the third month in a row in May. The increase in manufacturing was driven by investment in construction, road building and a rise in export orders. Energy and commodities mining stocks closed higher on a rise in copper, zinc and spot steel prices.

In Hong Kong trading Hang Seng Index gained 4% or 717.59 to 18,888.59 and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, rose 4.9% or 509.66 to 10,937.85. Hang Seng for the month surged 17%.

In Shanghai, the CSI 300 Index jumped 3.6% or 98.63 to 2,858.34.

Daily turnover on main-board increased to HK$100.3 billion from HK$92.2 billion on Friday last week.

China’s PMI Rises to 53.1% in May

China’s Federation of Logistics and Purchasing reported today that the country’s Purchasing Managers’ Index, which gauges activity in the country’s manufacturing sector was at a seasonally adjusted 53.1 in May following 53.5 in April.

The third successive monthly gain suggested that manufacturing is expanding as Chinese economic stimulus works its way through the economy.

A reading above 50 shows expansion, while a reading below 50 shows contraction.

China Drafts Energy Stimulus Plan

Xinhua News Agency reported National Energy Administration deputy head
Liu Qi said today a draft for the country’s energy stimulus plan has been completed after consultations with local governments, specialists, related authorities and industry players.

However, the plan will be restructured before it is forwarded to the National Development and Reform Commission and the State Council.

China Earmarks Rmb6 billion for House Buildings

The ministry of finance announced in Beijing today that the People’s Bank of China has allocated the second batch of Rmb6 billion as a special fund for low-rent house building projects across the country.

The first batch amounting to Rmb7 billion was released in April.

Beijing expects that the injection will be able to promote domestic demand and help low-income households to improve their living conditions.

Gainers & Losers

Financial stocks rose on rising hopes the global economy is rebounding. China Life rise 6.6% to HK$30.10 and Ping An Insurance jumped 10% to Rmb43.57.

Commodity stocks gained after gold prices increased 1.7% to $980.3 per ounce and crude oil prices edged up 1.9% to $66.3 per barrel.

China also increased its fuel prices for the second time this year.