Shanghai stocks reverse losses to close up 5.5pc amid Beijing's support

Major mainland stock indices closed up more than 5 per cent yesterday, with the Shanghai market clawing its way out of bear-market territory, as investors showed renewed confidence following a slew of supportive measures from Beijing.

The mainland markets experienced another intense rollercoaster ride, recovering from steep falls in the morning session, when there were some signs of panic selling, to rally strongly in the afternoon.

The key Shanghai Composite Index dropped as much as 5.1 per cent at one stage yesterday morning, before finishing up 5.53 per cent to close at 4,277.22. The Shenzhen Composite Index jumped 4.8 per cent to close at 2,464.23.

The ChiNext board in Shenzhen rallied 6.28 per cent to 2,858.61, after dropping more than 7 per cent at one stage in the morning.

The Shanghai Composite Index remained the best performing major equity index in the world in the first half of the year despite a sharp correction since mid-June, outshining the rest with a 35.1 per cent gain.

That compares with an 11.7 per cent gain for Hong Kong's Hang Seng Index in the first half and a 16 per cent gain for Japan's Nikkei. America's Dow Jones Industrial Average had lost 2.2 per cent this year by the close of trade on Monday and the S&P 500 had shed 1.1 per cent.