China Life, Citic Bank help benchmark Shanghai Composite Index snap four-day decline
- Chinese financial stocks rally after the loan prime rate was kept unchanged this month and China Life forecast a profit jump of as much as 200 per cent
- Xiaomi and Meituan surged at least 4.3 per cent in Hong Kong after onshore investors will be allowed to buy companies with weighted voting rights
China’s benchmark stock gauge rose for the first time in five sessions as banks and insurers rallied after policymakers left a key loan rate unchanged.
The Shanghai Composite Index rose 0.1 per cent, or 1.48 points, to 2,939.62 on Monday, as a late rally lifted the benchmark into positive territory. It had dropped 2.3 per cent in the previous four sessions. Hong Kong’s Hang Seng Index was almost unchanged at 26,725.68.
Traders piled into banks after China kept the loan prime rate unchanged at 4.2 per cent this month, quelling concern that banks’ lending margins will be hurt. The consensus estimate was a cut of five basis points in the rate, according to Bloomberg data. China Life Insurance also lifted sentiment, jumping 5 per cent after forecasting a profit increase of as much as 200 per cent for the first nine months.
“Positive earnings expectations and the surprise decision not to lower the loan prime rate give banking shares considerable support,” said Gerry Alfonso, director of the international business department at Shenwan Hongyuan Group in Shanghai. The unchanged loan prime rate was “likely to have only a short-lived impact on the equity market as the expected cut was marginal”.
