China stocks rose on Thursday as a strong rally on Wall Street helped calm shaky global markets, prompting Chinese and foreign investors to hunt for bargains after a 20 percent plunge over the past week.
The benchmark Shanghai Composite Index jumped 5.34 percent to 3,083.59 on Wednesday — it’s biggest gain in eight weeks. The smaller Shenzhen Component Index up 3.58 percent to 10,254.35 points.
Wall Street rallied nearly 4 percent overnight, easing fears of a deep and protracted global market rout after a heavy selloff earlier in the week, sparked in part by worries about China’s cooling economy and plunging stock markets.
On Tuesday evening, the People’s Bank of China (PBOC) cut interest rates for one-year lending and deposits by 25 basis points, and announced a reduction of the reserve requirement ratio (RRR), the portion of money banks need to set aside.
This is the fourth RRR reduction in nearly seven months, and the fifth round of interest cuts in nearly nine months.
The central bank said the move was aimed at supporting the real economy amid downward pressure on growth and fluctuations on global financial markets.
Chinese stocks have tumbled in the past week following the release of weak economic data and a depreciation of the yuan, with the benchmark Shanghai index diving 8.49 percent on Monday in its biggest daily slump since February 2007.
Story by the People’s Daily with information from the Associated Press.