China commodities rally on hopes of stimulus to boost economy – by Manolo Serapio Jr. (Reuters U.S. – July 4, 2016)

MANILA – Chinese commodities from nickel to cotton surged on Monday on hopes Beijing will unleash more stimulus to prop up a sluggish economy, brightening the outlook for raw material demand.

An official survey on Friday pointed to China’s weak manufacturing sector in June with export orders and inventories falling and factories shedding more workers.

“There are headwinds in the domestic market and exports and for the government to achieve its macroeconomic targets they need to focus on more stimulus in the second half of the year,” said Helen Lau, an analyst at Argonaut Securities in Hong Kong. “That will be good for commodity demand.”

Chinese commodities have mostly outperformed stocks this year as investors see more upside potential after a glut hit the sector hard. A rally in commodities in April caused prices and volumes to soar and forced exchanges to step in to curb speculative activity.

The gains also reflect a recovery in risk appetite among Chinese investors as the immediate fallout from the British vote to exit the European Union eases.

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