China stocks close up strongly on government moves

China stocks close up strongly on government moves

SHANGHAI - Agence France-Presse
China stocks close up strongly on government moves

AFP photo

Chinese stocks stormed into positive territory in volatile trade on July 9 as Beijing launched new measures to halt a dramatic sell-off, prompting Asian markets to rebound, but dealers questioned whether the gains would last.

The main Shanghai Composite Index had fallen more than 30 percent since a spectacular bull run peaked on June 12, raising fears for the wider economy, the world’s second-largest.

But the benchmark surged 5.76 percent, or 202.14 points, to 3,709.33 on turnover of 673.3 billion yuan ($110.1 billion). It fell as much as 3.81 percent and rose up to 6.88 percent during the day, representing a swing of more than 10 percent.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, ended up 3.76 percent, or 70.90 points, to 1,955.35 on turnover of 277.6 billion yuan.

More than 1,100 stocks on both markets surged by their 10 percent daily limits, data from the exchanges showed.

The gains came after China moved to stop “major” shareholders, those holding at least a five percent stake, from selling their stocks and launched a probe into short-selling in a bid to calm markets.

“As China beefs up its efforts to rescue the market... market sentiment is recovering slightly,” Qian Qimin, an analyst at Shenwan Hongyuan Group, told Bloomberg News.

“The rise today may help ease some selling pressure when companies resume their shares from trading, but whether it’s sustainable will depend on what policies are coming next.”   

More than 1,400 companies have been suspended from trading on China’s share markets as of Thursday, representing around 50 percent of listed stocks, according to Bloomberg. The move temporarily averts further falls in their prices, but seizes up the markets.     

Heavyweight financial stocks rose. Shanghai-listed banking giant ICBC added 2.01 percent to 5.58 yuan, while Shenzhen-listed Ping An Bank jumped 8.11 percent to 14.26 yuan.

Asian markets also rose on July 9, reversing heavy morning losses and tracking the surge in Shanghai.

But US shares retreated overnight on worries about how the stock market rout could affect the Chinese economy,  a key driver of global growth, and worries of a messy Greek exit from the eurozone.

The falls of recent week were triggered by restrictions on margin trading, reinforced by concerns about overvaluations, and accelerated by “panic” selling among the retail investors who make up the vast majority of the market.