Hong Kong markets were shut for a local holiday.

China’s blue-chip CSI300 Index added 0.1% by the lunch break, while the Shanghai Composite Index gained 0.2%.

China’s factory activity returned to expansion in June, supported by an increase in new orders that lifted production, a private sector survey showed today.

Financial shares rebounded today and led gains onshore, after falling for three straight sessions.

The sector has outperformed the benchmark CSI 300 Index, and is up 7% this year.

Financial stocks such as insurance and state-owned banks remain the preferred core holdings as they offer defensive value in the short term and stand to benefit from yuan appreciation over the medium term, said analysts at Huatai Securities.

Artificial intelligence and real estate shares fell 1% each.

Mainland stocks were roughly flat in the first half of the year, as Chinese investors are piling into Hong Kong shares, lured by lower valuations and the city’s strategic position in China’s growing rivalry with the US.

Investors are closely monitoring the upcoming half-year earnings season for onshore stocks, starting in July, to gauge whether corporate fundamentals are showing signs of improvement.