Daily Report

China stocks post best weekly performance this year in run up to NPC congress

Shanghai Composite advances 4.9 per cent for the week

PUBLISHED : Friday, 04 March, 2016, 9:00am
UPDATED : Friday, 04 March, 2016, 6:41pm

Mainland Chinese stocks reversed sharp losses and closed higher on Friday after a volatile session, extending a four-day bull run and posting the best weekly performance in 2016, as analysts believe state-backed funds have intervened to shore up the market a day ahead of the country’s annual parliamentary meeting.

The Shanghai Composite Index declined as much as 1.8 per cent in the early going, but was lifted by gains in the financial and oil sectors, ending 0.5 per cent higher at 2,874.15. For the week, the index jumped 3.9 per cent, the biggest weekly increase since mid-December.

The large-cap CSI300 advanced 1.2 per cent or 35.47 points to 3,093.89. However, the Shenzhen Composite Index declined 2.9 per cent or 51.17 points to 1,706.97. The ChiNext Index sank 5 per cent or 100.04 points to 1,907.04.

In Hong Kong, the Hang Seng Index widened gains at close, finishing 1.2 per cent higher, or 234.94 points, at 20,176.70. For the week, the index rose 4.2 per cent.

“The National Team is coming,” said Wu Guoping, a fund manager at Guangdong Yurong Investment. “We can tell from the losses in the start-up index in Shenzhen that bears are pulling hard against bulls. But the National Team is buying heavily-weighted stocks, such as banking shares, to prop up the benchmark index in Shanghai,”

“Looking forward, we shall wait and see if a turnaround may take place in Shenzhen stocks,” he added.

Zhou Jianhua, an analyst for Central China Securities, also believes sentiment will continue to improve in the short term, due to expectations on big stimulus programmes during the annual parliamentary meetings.

Thousands of government officials and business leaders are gathering in Beijing for the country’s most important political convention of the year. The Chinese People’s Consultative Conference, China’s top political advisory body, kicked off on Thursday, while the National People’s Congress is set to get underway Saturday.

However, Zhou also cautioned of a possible retreat in the major Chinese stock indexes after the meetings are over. Uncertainties that will weigh on market include the US Federal Reserve’s monthly rate-setting meeting in March.

On Friday, the People’s Bank of China set the daily reference rate at 6.5284 against the US dollar, 128 basis points stronger than the previous day’s setting, marking the biggest jump in nearly three weeks.

Among sectors helping to pull mainland markets to the upside on Friday were banking, insurance and state-owned energy companies.

China Minsheng Banking Corp soared 7.2 per cent to 9.33 yuan, China Merchants Bank surged 5.5 per cent to 15.98 yuan, and China Citic Bank and China Everbright Bank both jumped 5.1 per cent, closing at 5.94 yuan and 3.73 yuan each.

PetroChina climbed 3.2 per cent to 7.82 yuan, Sinopec gained 2.9 per cent to 4.68 yuan, and China Life Insurance Company advanced 2.9 per cent to 22.74 yuan.

In Hong Kong, China Minsheng Banking Corp rallied 3.9 per cent to HK$7, ICBC advanced 1.2 per cent to HK$4.09, and Sinopec rose 1.1 per cent to HK$4.82.

However, property shares retreated in Shanghai markets following a big rally in the previous session, as Greenland Holdings tumbled 3.3 per cent to 14.34 yuan, Huayuan Properties slid 3.2 per cent to 5.42 yuan, and Poly Real Estate Group lost 0.8 per cent to 10.27 yuan.

In Hong Kong, Samsonite announced it would acquire travel luggage maker Tumi for US$26.75 per share, valuing Tumi at US$1.8 billion (about HK$14 billion). Samsonite shares ended 1.3 per cent higher at HK$24 in resumed trade.

With additional reporting from Jessie Lau and Enoch Yiu