Stocks rally as small caps lead gains

Chinese stocks rebounded from earlier losses as consumer and banking firms rose, after a private survey showed the country’s factory growth rose to the highest level in six months in February.

The benchmark Shanghai Composite Index ended up 0.44 percent to 3,273.75 points on Thursday, recovering from losses in the morning session, with small caps also leading the gains.

Growth in China’s manufacturing sector picked up to a six-month high in February as factories rushed to replenish inventories to meet rising new orders, a private survey showed on Thursday.

Everbright Securities jumped 1.39 percent to 13.09 yuan and China Merchants Securities edged up 0.53 percent to 17.19 yuan. Ping'an Insurance Group Co advanced 1.73 percent to 68.93 yuan.

Real estate developers went south. Gemdale Corp sank 3.98 percent and China Vanke Co lost 0.89 percent.

Retailers and consumer goods companies led the gains with Suning.com Co picking up 0.8 percent to 12.60 yuan and Joyoung Co adding 1.28 percent to 17.47 yuan while Aucma Co Ltd rose 1.86 percent to 4.37 yuan.

CEFC Anhui International Holding, a subsidiary of CEFC China Energy, tumbled 4.45 percent to 5.51 yuan, after news magazine Caixin reported that chairman of CEFC China Energy Ye Jianming is being investigated by authorities for suspected economic crimes.

Bank of China International said in a research note that the current liquidity situation is still favorable and fundamentals remain stable. It suggested investors pay attention to small and medium caps with significant earnings increase.

Overseas equity markets were lukewarm on Wednesday as both the Dow Jones and the NASDAQ went through volatile trading amid uncertainty about the outlook for United States interest rate hikes after Federal Reserve Chairman Jerome Powell suggested that the Fed may raise rates more than the three times currently anticipated.