China stock market

Chinese stocks rise most in two months as Beijing deemed to be adjusting policies to boost domestic growth

Shanghai Composite Index jumps 2pc, Hang Seng bounces 1.26pc

PUBLISHED : Tuesday, 24 April, 2018, 9:12am
UPDATED : Tuesday, 24 April, 2018, 11:50pm

Chinese stocks rallied the most in two months on Tuesday, after the country’s top leaders signalled what was read as more flexibility in bolstering economic growth and loosening monetary policy, amid mounting trade tensions with the US.

The Shanghai Composite Index jumped 2 per cent, or 60.92 points, to 3,128.93 by the close, a recovery after Asian markets were dampened last week as the US and China squared up over trade tariffs. The CSI 300 Index of big-caps also advanced 2.04 per cent. 

In Hong Kong, the Hang Seng Index rose 1.26 per cent, or 381.84 points, to end at 30,636.24, snapping two days of losses, with financial companies leading the charge.

The Hang Seng China Enterprises Index, or the H-share gauge, advanced 2.4 per cent in another sign of renewing optimism. 

The buying sentiment strengthened after a Politburo meeting, chaired on Monday by President Xi Jinping, aired the rarely mentioned expressions “boost domestic demand” and “keep in check the floodgate of monetary supply”, while omitting the word “deleveraging”.

Xi told the meeting China also wants to promote the healthy development of its credit, stock, bond, currency and property markets. 

Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai, said the carefully crafted wordings have led investors to believe the country’s top leaders are probably shifting policy towards a more pro-growth agenda, as the possibility of a full-blown trade war with the US remains firmly on the horizon.

“There are expectations that policies will be fine-tuned towards boosting domestic demand, as there was no mention of deleveraging,” he said.

There are expectations that policies will be fine-tuned towards boosting domestic demand
Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai

Securities brokerage Shenwan Hongyuan Group wrote in a note that fine-tuning of China’s monetary policy was further evidenced by this month’s cut in bank reserve requirement ratios. 

Stocks sensitive to interest rates and liquidity levels performed best on Tuesday, with shares in cement and steel makers, and property developers advancing.

Those in Anhui Conch Cement, China’s biggest producer, climbed 4.3 per cent to 34.08 yuan (US$5.41). Its Hong Kong-traded shares rallied 5.2 per cent to HK$47.50 (US$7.53).

Jiangxi Wannianqing Cement shares increased 6 per cent to 12.75 yuan, and those in Liuzhou Iron & Steel jumped 6.4 per cent to 7.64 yuan. 

Shares in China Vanke, the nation’s biggest property company, rose 3.4 per cent to 30.93 yuan in Shenzhen and 3.9 per cent to HK$33.35 in Hong Kong. Poly Real Estate Group stocks gained 4 per cent to 14.09 yuan while Future Land Holdings advanced 5 per cent to 33.91 yuan. 

Hong Kong-listed Legend Holdings enjoyed a second day of rises, climbing 3.2 per cent to HK$25.95, after eight of its existing shareholders agreed to join a national pilot programme allowing the bulk of its shares listed in Hong Kong to trade freely on the stock market. The programme is expected to triple the current market cap of H-shares.

Legend said on Monday evening that 880 million of its shares, or a 37 per cent of the company’s stock will be eligible to be converted.