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Monday, October 12, 2015, 15:28

China stocks surge more than 3%

By Agencies

BEIJING - China shares jumped over 3 percent on Monday to their highest level in seven weeks after the central bank took fresh steps to inject liquidity into the struggling economy and said the stock market's correction "is almost over".

Investors were also in a buying mood ahead of the 13th five-year economic plan to be announced later this month, expecting stimulus and other growth measures.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 3.2 percent to 3,447.69 points, while the Shanghai Composite Index gained 3.3 percent to 3,287.81.

Both hit their highest levels since Aug 24, though are still down more than 30 percent from their highs in mid-June, the start of a market rout that rocked global markets.

But in a sign that some investors may be returning to the market, trading volumes in Shanghai jumped over 60 percent from the previous session, and nearly tripled the low hit on Sept 30.

China's central bank on Saturday announced it would expand the pilot program on credit-asset pledged lending to nine municipalities and provinces.

Before this, the scheme was tried out in Shandong and Guangdong, the People's Bank of China (PBOC) said in an online statement.

The nine municipalities and provinces are Shanghai, Tianjin, Liaoning, Jiangsu, Hubei, Sichuan, Shaanxi, Beijing and Chongqing.

The move is expected to cut borrowing costs and guide more funds into agriculture and small enterprises to boost the real economy, the PBOC said.

China International Capital Corp (CICC) said in a report on Monday that it's "inevitable" for the central bank to expand the supply of base money as foreign reserves shrink, although it noted that banks currently have little incentive to obtain fresh liquidity in a slowing economy.

Investors were also emboldened by market-soothing comments from deputy central bank governor Yi Gang, who was quoted by official media as saying that China's stock market correction is "almost over."

And in Beijing's latest attempt to prevent a repeat of the summer rout that knocked the market down roughly 40 percent, China issued draft rules over the weekend to govern automated stock trading, which has been blamed in part for its role in the market tumult.

Stocks rose across the board, led by small-caps, with Shenzhen's growth board ChiNext surging 4.2 percent.

Real estate shares also posted robust gains, boosted by recent data showing in a recovery in property sales.

Poly Real Estate rose 2.9 percent after reporting a 20 percent rise in contract sales during the Jan-Sept period.

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