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Monday, January 18, 2016, 15:14

Chian stocks bounce back

By Agencies

SHANGHAI - China stocks bounced off 13-month intraday lows early Monday and closed higher, led by a sharp rebound in growth board ChiNext

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.4 percent, to 3,130.73, while the Shanghai Composite Index gained 0.4 percent, to 2,913.84 points.

The growth board jumped 3.2 percent.

Property shares recovered from initial losses and climbed 0.4 percent, after data showed China's home prices continued to rise in December 2015, adding to signs of improvements in the housing market.

Last Friday, Shanghai index closed lower than at any time since December 2014, leaving most investors who put their faith in Beijing's measures to end last summer's crash nursing losses.

Xiao Gang, head of the China Securities Regulatory Commission (CSRC), said at the weekend that the market rout had highlighted shortcomings in the country's regulatory mechanisms.

"The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect trading system, and inappropriate supervision mechanisms," Xiao said at an annual meeting. His remarks were published on the CSRC website.

"Wild market swings revealed our supervision and management loopholes," said Xiao Gang, head of the China Securities Regulatory Commission (CSRC), at a national conference on securities market regulation.

"The CSRC has learnt a lesson. We will improve regulation mechanisms, intensify supervision and guard against risks so as to create a stable and sound market," said Xiao.

He said the commission will "properly control" the scale of margin trading, which was blamed by some observers for partly heightening the market volatility last year.

The CSRC will closely watch program trading and make sure securities brokerages conduct such trading in a checked way, according to him.

In addition, the commission will make it mandatory for investors to use real names when applying for securities trading accounts and urge public companies to disclose information in a timely and transparent manner.

At the same conference, Xiao said China will gradually increase the quota for Qualified Foreign Institutional Investors (QFII) and RMB QFII.

QFII and RQFII are designed for foreign investors to trade securities in China's largely isolated capital market.

China will work for A share's inclusion into global stock indices, in a bid to make the performance of domestic market more of an international metric.

The country will encourage sovereign wealth funds, foreign pension funds and passive exchange traded funds (ETFs) to increase investment in China, according to Xiao.

In 2016, China will initiate Shenzhen-Hong Kong Stock Connect, improve Shanghai-Hong Kong Stock Connect and study the feasibility of Shanghai-London Stock Connect.

The country will also attract overseas institutional investors to the domestic bond market through QFII, RQFII and Shanghai-Hong Kong Stock Connect.

Hong Kong- and Macao-funded brokerages will be allowed to establish joint ventures on the Chinese mainland. In addition, the government will support domestic brokerages to open subsidiaries overseas.

"After experiencing the crashes last year, the sentiment is quite vulnerable and pessimistic now," said Xiao Shijun, an analyst at Guodu Securities in Beijing.

Hong Kong stocks moved down 283.32 points, or 1.45 percent, to close at 19,237.45 points on Monday.

The benchmark Hang Seng Index traded between 19,195.56 and 19,439.49. Turnover totaled HK$75.03 billion (about US$9.62 billion).

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