China market rises most in two years as pension funds get OK to invest in stocks
The mainland’s major indices gain more than 2pc; Hong Kong’s benchmark up 1.5pc
China’s stock market rose the most in two years on Tuesday after the first batch of 14 pension target funds were approved by the China Securities Regulatory Commission, a move that is expected to draw inflows into mainland equities. The Hong Kong market rose in line, with gains led by China Evergrande Group.
Mainland stocks bounced back from their previous lows as the 14 long-awaited funds were allowed to invest in the equities market. Given their long-term nature, the pension target funds – or target retirement funds – were likely to favour A shares that provide high dividends and steady growth, analysts said.
The Shanghai Composite Index rose 2.7 per cent, or 74.22 points, to 2,779.37, marking the biggest daily gain since May 2016. The CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – increased 2.9 per cent, or 95.60 points, from Monday’s 22-month low, to 3,368.87.
The Shenzhen Composite Index added on 2.8 per cent, or 39.97 points, to 1,495.05 and the Nasdaq-style ChiNext was also up 2.7 per cent, or 38.64 points, to 1,479.44.
Market sentiments continued to stabilise after China’s central bank data showed that the nation’s foreign reserves rose for a second month to US$3.118 trillion in July, exceeding a US$3.107 trillion forecast.
The People’s Bank of China also decided last week to raise the reserve requirement ratio to 20 per cent from zero for financial institutions when they conduct onshore yuan forwards business on behalf of customers, making it more expensive to short the currency.
On Tuesday, the yuan rose 0.4 per cent to 6.8258 against the US dollar, after the PBOC lifted the daily currency reference rate by 0.12 per cent to 6.8431.