Daily Report | China stocks post best weekly performance this year in run up to NPC congress

Mainland Chinese stocks reversed sharp losses and closed higher on Friday after a volatile session, extending a four-day bull run and posting the best weekly performance in 2016, as analysts believe state-backed funds have intervened to shore up the market a day ahead of the country’s annual parliamentary meeting.

The Shanghai Composite Index declined as much as 1.8 per cent in the early going, but was lifted by gains in the financial and oil sectors, ending 0.5 per cent higher at 2,874.15. For the week, the index jumped 3.9 per cent, the biggest weekly increase since mid-December.

The large-cap CSI300 advanced 1.2 per cent or 35.47 points to 3,093.89. However, the Shenzhen Composite Index declined 2.9 per cent or 51.17 points to 1,706.97. The ChiNext Index sank 5 per cent or 100.04 points to 1,907.04.

In Hong Kong, the Hang Seng Index widened gains at close, finishing 1.2 per cent higher, or 234.94 points, at 20,176.70. For the week, the index rose 4.2 per cent.

“The National Team is coming,” said Wu Guoping, a fund manager at Guangdong Yurong Investment. “We can tell from the losses in the start-up index in Shenzhen that bears are pulling hard against bulls. But the National Team is buying heavily-weighted stocks, such as banking shares, to prop up the benchmark index in Shanghai,”

“Looking forward, we shall wait and see if a turnaround may take place in Shenzhen stocks,” he added.

Zhou Jianhua, an analyst for Central China Securities, also believes sentiment will continue to improve in the short term, due to expectations on big stimulus programmes during the annual parliamentary meetings.