China stocks rally to a one-month high on PBOC stimulus while Hang Seng Index struggles to break key technical threshold
- Market sentiment lifted by central bank’s moves to cut rates and a tapering in new coronavirus cases: Capital Securities
- Hang Seng Index slipped after coming up against strong technical resistance at near 28,000 level
China stocks rallied to a one-month high after the central bank unveiled yet another move to support the economy and mitigate the fallout from the coronavirus outbreak while speculation about a bailout for the airline industry boosted stocks of carriers. Hong Kong stocks slipped after failing to scale a key technical hurdle.
The Shanghai Composite Index climbed 1.8 per cent to 3,030.15, the highest level since January 22, a day before the government began locking down Wuhan and other provincial cities to contain the viral outbreak.
The Shenzhen Component Index advanced 2.4 per cent while the CSI 300 index gained 2.3 per cent and the technology-laden ChiNext Composite Index surged by 2.2 per cent. In Hong Kong, the Hang Seng Index slipped 0.2 per cent to 27,609.16 points.
The People’s Bank of China on Thursday lowered the loan prime rates for February, stepping up the support after it cut the rate on one-year medium-term lending facility loans on Monday to the lowest level since 2017. The central bank also added 100 billion yuan (US$14.2 billion) of liquidity via seven-day reverse repurchase agreements.
Investors were buoyed by policy measures from the central bank, as well as the tapering in new coronavirus cases, according to Wang Jianhui, general manager of research department at Capital Securities.
Securities trading companies reaped broad gains on the loan-rate cuts. Tianfeng Securities, Sinolink Securities, HuaAn Securities gained by the daily limit of 10 per cent.
Airline stocks also rallied as traders bought them amid reports the Chinese government was considering cash injections and mergers to bail out the stricken airline industry. A separate report also suggested the government was about to seize Hainan Airlines, part of the debt-laden HNA Group, as part of the exercise.