China’s stocks rose for a second day amid speculation the government has resumed its intervention in the equities market.
The Shanghai Composite Index climbed 1.4% to 3,125.45 at 9.34am, paring this week’s loss to 11%. The benchmark index rallied 5.3% on Thursday with all of the gains coming in the last 45 minutes of trading. PetroChina Co. led a rally for energy producers after crude futures soared 10% in New York on Thursday. The offshore yuan rose after the central bank boosted the currency’s reference rate by the most in five months.
“There is a lot of talk of state-linked funds purchasing stocks and helping the market,” said Gerry Alfonso, a Shanghai sales trader at Shenwan Hongyuan Group Co. “After the massive correction earlier in the week, investors are apparently starting to realize that the drop was overdone.”
Policy makers want to stabilise equities before a Sept 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, said two of the people, who asked not to be identified because the move wasn’t publicly announced. The shift followed the absence of state buying earlier this week.
The intervention to prop up shares is part of a broader effort to ensure nothing detracts from the parade, an event the government will use to demonstrate its rising military and political might. The parade has been planned for months and will provide President Xi Jinping his first opportunity to publicly present himself to the world as China’s commander in chief.
The Shanghai Composite has fallen 40% since the June peak amid concern the government has scaled back efforts to prop up equities and the deepning economic slowdown will hurt corporate profits. Data on Friday showed industrial companies’ profits slid for a second month, dropping 2.9% in July.
Government Support
China Securities Finance may have applied for 1.4 trillion yuan ($306 billion) of borrowing in the interbank market, Caixin reported, citing unidentified bank officials. The government should adopt a proactive fiscal policy and further ease monetary policy, the Economic Daily wrote in a front-page commentary. The People’s Bank of China announced a cut in interest rates for a fifth time since November and lowered reserve-requirement ratios for lenders earlier this week.
The Hang Seng China Enterprises Index climbed 1.8%, while the Hang Seng Index rose 1.6%. The CSI 300 Index advanced 1.3%, led by rallies of more than 3% for energy and industrial companies.
PetroChina, China’s biggest oil and gas producer, surged 3.4% even after it reported a 63% slump in first-half income. Oil headed for the biggest weekly advance since April after the largest one-day jump in six years as the US economy expanded more than predicted.
Industrial & Commercial Bank of China dropped 1.4% after reporting zero profit growth amid a buildup in bad loans.
Stocks on mainland bourses traded at a median 49 times reported earnings on Thursday, according to data compiled by Bloomberg. That’s the most among the 10 largest markets and more than three times the 18 multiple for the Standard & Poor’s 500 Index.
The People’s Bank of China raised the yuan reference rate by 0.15% to 6.3986 per US dollar on Friday morning, the most since March.
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The Shanghai Composite Index climbed 1.4% to 3,125.45 at 9.34am, paring this week’s loss to 11%. The benchmark index rallied 5.3% on Thursday with all of the gains coming in the last 45 minutes of trading. PetroChina Co. led a rally for energy producers after crude futures soared 10% in New York on Thursday. The offshore yuan rose after the central bank boosted the currency’s reference rate by the most in five months.
“There is a lot of talk of state-linked funds purchasing stocks and helping the market,” said Gerry Alfonso, a Shanghai sales trader at Shenwan Hongyuan Group Co. “After the massive correction earlier in the week, investors are apparently starting to realize that the drop was overdone.”
Policy makers want to stabilise equities before a Sept 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, said two of the people, who asked not to be identified because the move wasn’t publicly announced. The shift followed the absence of state buying earlier this week.
The intervention to prop up shares is part of a broader effort to ensure nothing detracts from the parade, an event the government will use to demonstrate its rising military and political might. The parade has been planned for months and will provide President Xi Jinping his first opportunity to publicly present himself to the world as China’s commander in chief.
The Shanghai Composite has fallen 40% since the June peak amid concern the government has scaled back efforts to prop up equities and the deepning economic slowdown will hurt corporate profits. Data on Friday showed industrial companies’ profits slid for a second month, dropping 2.9% in July.
Government Support
China Securities Finance may have applied for 1.4 trillion yuan ($306 billion) of borrowing in the interbank market, Caixin reported, citing unidentified bank officials. The government should adopt a proactive fiscal policy and further ease monetary policy, the Economic Daily wrote in a front-page commentary. The People’s Bank of China announced a cut in interest rates for a fifth time since November and lowered reserve-requirement ratios for lenders earlier this week.
The Hang Seng China Enterprises Index climbed 1.8%, while the Hang Seng Index rose 1.6%. The CSI 300 Index advanced 1.3%, led by rallies of more than 3% for energy and industrial companies.
PetroChina, China’s biggest oil and gas producer, surged 3.4% even after it reported a 63% slump in first-half income. Oil headed for the biggest weekly advance since April after the largest one-day jump in six years as the US economy expanded more than predicted.
Industrial & Commercial Bank of China dropped 1.4% after reporting zero profit growth amid a buildup in bad loans.
Stocks on mainland bourses traded at a median 49 times reported earnings on Thursday, according to data compiled by Bloomberg. That’s the most among the 10 largest markets and more than three times the 18 multiple for the Standard & Poor’s 500 Index.
The People’s Bank of China raised the yuan reference rate by 0.15% to 6.3986 per US dollar on Friday morning, the most since March.
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