November 1, 2016 / 4:31 AM / 2 years ago

China stocks rise by midday after strong manufacturing survey

* SSEC +0.33 pct, CSI300 +0.31 pct, HSI +1.14 pct

SHANGHAI, Nov 1 (Reuters) - Stocks in China and Hong Kong rose on Tuesday morning after an official survey showed the country’s manufacturing sector expanded at a faster pace than expected in October.

The CSI300 index advanced 0.31 percent by the end of the morning session, while the Shanghai Composite Index was up 0.33 percent.

In Hong Kong, the benchmark Hang Seng index ended the morning up 1.14 percent, while the Hong Kong China Enterprises Index leapt 2.07 percent.

The official Purchasing Managers’ Index (PMI), a measure of manufacturing activity, stood at 51.2 in October, compared with the previous month’s 50.4 and above the 50-point mark that separates growth from contraction.

The fresh data adds to views that the world’s second-largest economy is stabilising thanks to a construction boom.

But investors remained worried about a possible tightening in liquidity ahead as Beijing accelerates plans to trim corporate debt and struggles to stem yuan’s depreciation.

China’s 10-year treasury bond futures touched a one-month low before rebounding on Tuesday, signalling expectations of tighter liquidity ahead.

“Economic restructuring takes time... and there is not much fresh money inflows into the China market, so the index will be relatively stable, but there are structural opportunities,” said Jie Lu, head of China research at the Rotterdam-based asset management firm Robeco.

Lu said he saw opportinies going forward in the consumerhigh-tech and environmental protection sectors.

Hong Kong stocks rebounded from a two-month low hit on Monday, but investors remained cautious ahead of next week’s U.S. presidential election, and a possible U.S. rate hike in December.

Uncertainty around the election has spiked after disclosure that the FBI was opening a fresh probe into Hillary Clinton’s use of a private email system, cutting the Democratic candidate’s lead over Republican rival Donald Trump.

Reporting by Samuel Shen and John Ruwitch; Editing by Sam Holmes

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