China stocks ended a volatile week slightly higher on Friday, after the US Federal Reserve held off from raising interest rates citing concerns about a weak world economy. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.4 percent, to 3,251.27, but was down 2.9 percent for the week. The Shanghai Composite Index gained 0.4 percent, to 3,097.92 points, but was 3.2 percent lower for the week.
China's stock market has seen extreme gyrations in the past week on worries about the economy and as Beijing stepped up efforts to clean up unregulated margin financing and crack down on corruption in the stock market. It rebounded on Wednesday after falling 6 percent over the previous two days but dipped in and out of positive and negative territory afterwards.
Positive property data released on Friday - home prices rose for the fourth straight month in August with a month-on-month gain of 0.3 percent - had little effect on the market. A key index tracking real estate companies edged up only 0.2 percent. Investor attention quickly shifted to domestic issues, with many seeing regulators' guidance to brokerages against an indiscriminate approach in the clean-up of illegal margin financing as being moderately positive.
"The US raising rates would trigger fresh fears of capital flight, so leaving the rates unchanged is positive, though mildly," said Yang Hai, strategist at Kaiyuan Securities. "Regulators' softening stance in the clean-up of illegal margin financing is also market-soothing. The market had expected an end-September deadline, but obviously, it's not the case."
The market is unusually calm on a day when September index futures contracts will be settled, partly because the duel between the bulls and the bears was largely completed earlier in the week, Yang said. For the week, both indexes are set to fall around 3 percent, failing to recover fully from the damage done during the first two days, during which the market tumbled roughly 6 percent.
With the indexes around 40 percent down from their mid-June highs, and numerous trading restrictions in place, nearly 80 percent of investors have stood on the sidelines in recent weeks, resulting in weekly trading volumes at just one fourth of their peak in early July. Positive property data released on Friday - home prices rose for the fourth straight month in August with a month-on-month gain of 0.3 percent - had a relatively limited impact on the market as it was expected, according to Gerry Alfonso, director at Shenwan Hongyuan Securities Co.