Government support fuels Shanghai stock surge; top forecaster believes year’s biggest bounce underway

The Shanghai and Shenzhen bourses will roll out measures to ease share-pledge risks to echo support from Vice-Premier Liu He and top regulators

Haitong Securities sees Shanghai Composite Index rebound at least 10 per cent on policy support

Reading Time:3 minutes

Investors monitor stock prices at a securities company in Shanghai on September 25, 2018. Photo: AFP

Zhang Shidongin ShanghaiandDaniel Renin Shanghai

Published: 12:20pm, 22 Oct 2018Updated: 6:42pm, 25 Oct 2020

China’s Shanghai and Shenzhen stock exchanges pledged more measures to revive confidence on the world’s worst-performing equity market this year, echoing the support from senior officials and financial regulators to defuse the share-pledge risk and aid the private sector.

The Shanghai bourse will explore the unveiling of new funds to bail out companies that pledge their shares as collateral for loans, and the smaller Shenzhen exchange said it will closely work with local governments and financial institutions to help the companies, according to two separate statements put out on the exchanges’ websites on Sunday.

Meanwhile, the China Securities Regulatory Commission said a day earlier that it will shorten the period before some companies can seek back-door listings, softening the rules on reverse mergers.

Top-ranked Haitong Securities predicts the Shanghai Composite Index may rebound more than 10 per cent in what could be the year’s biggest bounce-back as government policies put a floor for the market.

The announcements by the two exchanges came after Vice-Premier Liu He, President Xi Jinping’s close economic aide, made a rare comment on China’s stock market on Friday, saying the declines offers good buying opportunities because of low valuations and China’s growth prospects.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x