Chinese shares rose by the most in three months on Thursday, outperforming other stock markets in Asia, lifted by cement and other construction-related stocks as investors bought into them on anticipated demand. Cement stocks have outperformed this week, lifted by local Chinese media reports on a plan to allow local governments to sell bonds to ease funding strains on low-cost housing projects.
Thursday's gains helped the benchmark Shanghai Composite Index outperform its regional peers as it ended up 1.5 percent to 2,688.3 points with turnover spiking to its highest in six sessions, extending a two-session winning streak since hitting the lowest level in nine months on Monday.
Some dealers also cited a comment by a senior law-maker saying the central bank should suspend raising bank reserve rates requirements as partly responsible for the late rally, spurring Bank of China to a 2.3 percent gain. Analysts said some of the bigger mainland institutional names have turned rather bullish on the outlook on the Chinese economy for the second half of the year.
China Shenhua Energy Co Ltd and Anhui Conch Cement were among the biggest support to the benchmark, gaining 2.9 and 4.6 percent respectively. Hong Kong shares finished lower for the second straight session on Thursday as a cash crunch in China's money market, largely due to quarter-end demands on funds, kept banks on the defensive as borrowing costs for short-terms funds hit multi-year highs for the third straight session.
The benchmark Hang Seng Index dipped 0.5 percent to 21,759.1 points, inching back towards a nine-month low of 21,508.8 recorded on Monday. China's top banks were among the top drags on the benchmark on Thursday, with China Construction Bank (CCB) down 2.0 percent and Industrial and Commercial Bank of China (ICBC) down 1.4 percent. Thursday's losses plunged both stocks into technically oversold territory. Shanghai-listed shares of the top four Chinese banks trade at a valuation discount of between 20 and 30 percent to the Hong Kong-listed H-shares, largely due to retail investors bailing out of the sector over the past year due to tightening fears and dilutive fund-raisings.