Update | Mainland China stocks cheered by hopes of pension fund buying; Hong Kong investors await earnings reports

Shanghai stocks posted their biggest daily rally in over three months on Monday as investors were cheered by a report that China’s massive pension funds could invest another 10 billion yuan in buying domestic equities as early as this week.

The Shanghai Composite Index jumped 1.2 per cent or 37.89 points to close at 3,239.96, the highest level since early December, while the CSI300 – which measures the performance of large companies listed in Shanghai and Shenzhen – gained 1.5 per cent to 3,471.39.

The Shenzhen Component Index and the Nasdaq-style ChiNext index rose 1.3 per cent and 0.6 per cent respectively to 10,329.0 and 1,894.96.

The first wave of investments by the state pension funds’ equity portfolio managers are set to release 10 billion yuan onto domestic equity markets as early as this week, the state-run Securities Times said Monday on its official Weibo account.

Before the Lunar New Year holidays, the 5-trillion-yuan (US$728 billion) pension fund had already allowed managers of other portfolios to start investing in A-shares, the newspaper said.

“It will be a significant boost to market stability and investor confidence, although we don’t anticipate much money to be invested at first,” said Fu Chuankui, an analyst for Dongguan Securities. “It may be a gradual progress.