China stocks end higher on stimulus hopes, trade optimism

Madiha Shakeel September 5, 2019

SHANGHAI: China stocks ended higher on Thursday, boosted by hopes Beijing will free up the amount of cash banks must keep as reserves to shore up the economy, while another round of talks between China and the United States in October aided sentiment.

** The blue-chip CSI300 index rose 1.0%, to 3,925.32, while the Shanghai Composite Index also closed up 1% at 2,985.86.

** China will implement both broad and targeted cuts in the reserve requirement ratio (RRR) for banks “in a timely manner,” China’s cabinet said in a meeting on Wednesday, an indication that a cut in the key ratio aimed at boosting lending could be imminent.

** “There is room for cutting RRR and it’s necessary to do so,” said Wen Bin, economist at Minsheng Bank. “China’s investment and consumption face downward pressure. It’s necessary to cut RRR for all banks to support the real economy.”

** Meanwhile, China and the United States agreed to hold high-level trade talks in early October in Washington, China’s commerce ministry said on Thursday, amid fears that an escalating trade war could trigger a global economic recession.

** Many of China’s analysts believe the negative impact on the A-share market from the Sino-U.S. trade war would marginally decrease with time, as Beijing rolls out more measures to boost the economy at a time when A-shares’ valuations are reasonable and more international money flows in as the country further opens up its capital markets.

** JPMorgan will add Chinese government bonds to its widely-tracked emerging market local currency bond index from February 2020 – a decision expected to suck billions into the world’s third-largest bond market.

** Major index providers MSCI and FTSE Russell will announce further increased inclusion factors for the A-share market later this year.

** For the day, investors via the Stock Connect linking Hong Kong and the mainland purchased a net 9.7 billion yuan ($1.37 billion) worth of A-shares, extending their recent buying interest.

** Around the region, MSCI’s Asia ex-Japan stock index  was firmer by 0.71%, while Japan’s Nikkei index  closed up 2.12%.

** At 0715 GMT, the yuan was quoted at 7.1398 per U.S. dollar, 0.07% firmer than the previous close of 7.145.

** The largest percentage gainers in the main Shanghai Composite index were Xishui Strong Year Co Ltd Inner Mongolia , up 10.06%, followed by Guizhou Gas Group Corporation Ltd, gaining 10.02% and Hefei Metalforming Intelligent Manufacturing Co Ltd, up by 10.02%.

** The largest percentage losers in the Shanghai index were Beijing Xinwei Technology Group Co Ltd down 5.05%, followed by Furen Group Pharmaceutical Co Ltd losing 5.01% and North China Pharmaceutical Co Ltd down by 4.98%.

** About 30.54 billion shares were traded on the Shanghai exchange, roughly 182.7% of the market’s 30-day moving average of 16.71 billion shares a day. The volume in the previous trading session was 22.55 billion.

** As of 0715 GMT, China’s A-shares were trading at a premium of 28.29% over the Hong Kong-listed H-shares.

Copyright Reuters, 2019

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