NewChina shares rebound - notching biggest daily gain in more than two months
Expectations of additional stimulus helped fuel a wave of share buying, analysts say
The mainland China share markets showed up for their best performance in more than two months on Tuesday, as investors bet the central government would help backstop the market with stimulus measures after official GDP numbers confirmed the economy cooled to its slowest pace of growth of the year in the December-ended quarter.
Beijing is mulling new measures to boost credit in a bid to prevent the economy from a further slowdown, analysts said. ANZ Bank and Guotai Junan Securities said on Tuesday that the People’s Bank is likely to further cut the required reserve ratio before early February, helping to pump more liquidity into the market.
The Shanghai Composite Index rallied 3.22 per cent, or 93.90 points to 3,007.74 on Tuesday’s close, marking the biggest daily gain since November 4. The CSI300 Index advanced 3 per cent, or 92.40 points to 3,223,13. The Shenzhen Composite Index surged 3.57 per cent, or 65.42 points to 1,895.75. The Nasdaq-style ChiNext Index also rallied 3.1 per cent, or 66.76 points to 2,241.70.
Kevin Leung, the director of global investment strategy at Haitong International Securities, said sentiment had improved, although the stock market had likely yet to bottomed out.
“What we see today looks like a technical rebound, but the downward pressure has not been fully released, considering the macro fundamentals haven’t showed solid improvements,” Leung said.
China’s gross domestic product, or GDP, grew by 6.8 per cent the fourth quarter on year, according to figures released by the National Bureau of Statistics on Tuesday. The result was slightly weaker than consensus estimates and the slowest since the financial crisis. For the full year, GDP expanded 6.9 per cent last year, matching expectations, but the slowest since 1990.
Tom Rafferty, Asia Economist for The Economist Intelligence Unit in Beijing, said rising consumption has offset softer industry and investment growth. Still he expressed concern about the sustainability of the two-speed economy.