China Stocks Rise as Optimistic Purchasing Managers' Index Data Boosts Hopes for Recovery

(Bloomberg) - Chinese stocks are gaining ground as a rebound in manufacturing activity boosts hopes that the country's economic recovery may be starting to gain traction.

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The benchmark CSI 300 index kicked off the second quarter on a positive note, rising as much as 0.9%, the highest gain among major Asian benchmarks. Materials and industrials were the top gainers, while the Hong Kong market was closed for the Easter holiday.

China's official Manufacturing Purchasing Managers' Index hit a one-year high, adding to recent signs that the world's second-largest economy is starting to gain momentum. The CSI 300 Index posted its first quarterly gain in a year after the Chinese government introduced a series of measures to support economic growth and restore confidence.

"The emerging optimism about China is real," said Vishnu Varathan, Simmons Economist for Asia ex-Japan at Mizuho Bank in Singapore. There is a corresponding optimism in the rest of Asia, which is in line with the global manufacturing revolution," he said.

But the ongoing downturn in the real estate sector could limit the market's growth, as the latest data showed that China's home sales slump continued in March.

The latest round of corporate earnings reports has also heightened investor caution. The latest round of corporate earnings reports from BYD Co. and Wuxi Biologics Cayman Inc.

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