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Wednesday, March 2, 2016, 15:35

China stocks have best day in 4 months

By Agencies

SHANGHAI - China stocks had their best day in four months, jumping over 4 percent, as investors piled into real estate and resources shares, encouraged by tentative signs of recovery in the property market.

Investors shrugged off news that rating agency Moody's cut its China outlook to "negative" from "stable", as the market awaits policy cues from China's annual meeting of top legislatures that starts March 5.

The benchmark Shanghai Composite Index up 4.26 percent, at 2,849.68 points.

The smaller Shenzhen index closed 4.77 percent higher at 9,766.37 points. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, gained 4.27 percent to close at 2,017.6 points.

The blue-chip CSI300 index rose 4.1 percent, to 3,051.33.

Stocks rose across the board, with an index tracking developers surging 5.6 percent, amid media reports of a more sure-footed recovery in the market for homes in China's first and second-tier cities following a slew of supportive measures.

Resources stocks were up 6 percent.

Xinhua news agency said in a commentary that China's cut in banks' reserve requirement ratio (RRR) - which took effect on March 1 - is by no means a signal of any coming large-scale stimulus.

The commentary follows rising speculation China could implement a version of the massive stimulus it adopted during the 2008 global financial crisis. That package was later criticised for misallocating resources and delaying much-needed structural reforms.

"There was some confusion over the government's policy directions. Now, investors have much clearer expectations," said Zeng Yan, strategist at Zhongtai Securities Co.

"Recent signs of recovery in the property market provided some confidence that the economy could be stabilizing."

Meanwhile, Zeng brushed aside the impact from the China outlook downgrade by Moody's Investors Service, saying the move is an underestimation of Beijing's strength.

Moody's cut its outlook to "negative" from "stable", saying there was a weakening in the government's fiscal position and uncertainty about the authorities' capacity to implement reforms.

A major rationale for downgraded outlook, Moody's said, was the large stock of contingent sovereign liabilities such as state-owned corporations' debt, local government debt, and the debt of China's big "policy" banks - the Agricultural Development Bank of China, China Development Bank, and the Export-Import Bank of China.

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