China stocks closed higher on Thursday as investors waded back into financial shares after selling off for three days. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 3.3 percent, to 3,335.42, while the Shanghai Composite Index gained 3.4 percent. Among the most active stocks in Shanghai were Bank Of China, up 4.5 percent at 3.73 yuan; GD Power, up 4.0 percent at 4.70 yuan; and, China State Construction , up 9.8 percent to 6.71 yuan.
In Shenzhen, the most actively traded shares included CS Zoomlion, which jumped 10.0 percent to 6.84 yuan, BOE Technology, which rose 2.5 percent to 3.31 yuan, and Changjiang Securities, which climbed 5.0 percent to 15.60 yuan. Total volume of A shares traded in Shanghai was 37.6 billion shares, while Shenzhen volume was 14.9 billion shares. It quoted unnamed insider sources who attended a meeting with the central bank, at which 24 major financial institutions were told that even if interbank assets are included in the base, they may not need to set aside additional reserves, leaving more liquidity available for lending and investment. "The central bank setting a zero deposit reserve for non-banking financial institutions is a positive development for financials, particularly banking shares.
Also, funds locked up by IPOs have gotten unfrozen since yesterday, largely improving capital conditions in the market," said Du Changchun, analyst at Northeast Securities in Shanghai. The China Business News report was circulated widely online on Thursday morning and financial stocks began a sharp rally when trading opened, helping to pull the CSI300 index up 2.6 percent to 3,315.57 points as of the end of the morning session, while the Shanghai Composite Index gained 2.4 percent to 3,043.50 points.
China CSI300 stock index futures for January rose 2.6 percent to 3,332, or 16.43 points above the current value of the underlying index. The money markets were not significantly moved by the report, however, with the weighted average of the benchmark seven-day bond repurchase agreement dropping slightly to 4.8762 percent as of midday. Hong Kong markets are closed on Thursday and Friday for the Christmas holiday, and will reopen for trade on December 29.