China stocks post two-day strong rebound

World Today

Investors look at a board showing stock market movements at a securities company in Beijing on July 10, 2015. Chinese stocks surged for a second day on July 10 as a government rescue plan offered a respite from a month-long rout, but analysts warned of further uncertainty and volatility ahead. (AFP PHOTO / GREG BAKER)

Chinese shares staged a strong two-day rebound after moves by the government to bolster the market. The benchmark Shanghai Composite Index leaped 4.54 percent to finish at 3,877.8 points on Friday. The Shenzhen Component Index surged 4.59 percent to close at 12,038.15 points.

The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, climbed 4.11 percent to end at 2,535.89 points. Combined turnover of the two bourses shrank to 927.76 billion yuan ($152.09 billion) from 950.8 billion yuan the previous trading day.

Only six stocks lost in Shanghai and Shenzhen at the closing. More than 1,300 shares on the two bourses jumped by the daily limit of 10 percent.

On Thursday, the Shanghai index soared 5.76 percent, the biggest daily rise in six years, the Shenzhen index soared 4.25 percent and the ChiNext Index went up 3.03 percent.

The Shanghai index has lost about 28 percent of its value since a spectacular bull run ended with a peak of 5.178.19 points on June 12.

Since last weekend, the government has rolled out a batch of supportive measures to halt the further slump of the market, including moves to pour funds and restrictions on futures trading on a major small-cap index.

But the measures did not result in any immediate rally, until intensive measures taken on Thursday.

On Thursday, Chinese police joined the securities regulator to probe clues related to “malicious short selling” amid recent chaos in the stock market.

The securities watchdog announced that China Securities Finance Corporation Limited (CSF), the national margin trading service provider, will provide liquidity to apply for the purchase of a public offering funds.

The banking watchdog announced it would allow banks to extend mortgage loans that use share funds as collateral to prop up the market.

The central bank reiterated it would continue to support the liquidity needs of the CSF and has made sufficient re-lending to the CSF. The central bank also approved CSF issuing short-term financial bonds in the interbank market to replenish liquidity.

On Friday, four state-owned assets management companies vowed not to sell stocks during the abnormal changes of the market.

Sun Xiwei, an analyst with CITIC Securities, said the two-day rally responded to the government moves to bail out the market and the market is expected to stabilize in about two months.

Story by Xinhua


Brendan Ahern and Scott Kennedy on the future of the Shanghai Composite
For more on the future of the Shanghai Composite, CCTV America’s Mike Walter spoke to Brendan Ahern, he’s the CIO of KraneShares a financial consultant group focusing on Chinese investment. And Scott Kennedy, he is deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies.
Follow them on Twitter:
Follow Mike Walter on Twitter @mikewaltercctv
Follow Scott Kennedy on Twitter @KennedyCSIS
Brendan Ahern and Scott Kennedy on the future of the Shanghai Composite

Brendan Ahern and Scott Kennedy on the future of the Shanghai Composite

For more on the future of the Shanghai Composite, CCTV America's Mike Walter spoke to Brendan Ahern, he's the CIO of KraneShares a financial consultant group focusing on Chinese investment. And Scott Kennedy, he is deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies.

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