Chinese stocks climb as CSRC steps in again to talk up world’s worst-performing market

China’s stocks rose for the first time in three days on Tuesday, as the securities regulator said it will improve the quality of listed companies and woo long-term investors as its latest move to talk up equities, countering concerns about an escalating war with the US.

The Shanghai Composite Index added 1 per cent on Tuesday, reversing an intraday loss of as much as 0.8 per cent, after the China Securities Regulatory Commission made a rare comment in trading hours aimed to arrest the world-beating decline on China’s stock market this year. Hong Kong’s Hang Seng Index slipped back to a down trajectory.

Ping An Insurance Group closed higher after the insurer said it plans to purchase up to 10 per cent of its shares in what would become a record buy-back in China. Beiqi Foton Motor led the upsurge among carmakers on speculation that Beijing may be planning to halve the tax on car purchases.

In a four-line statement put out on the website during Tuesday’s morning trading session, the CSRC said it will encourage share buy-backs and mergers and acquisitions, boost market liquidity by scaling back intervention in trading and guide the entry of more long-term investors. Before that, stocks were lower as the US is poised to slap tariffs on all remaining Chinese imports, which could be worth US$257 billion based on last year’s figures. Still, President Donald Trump said in an interview with FOX News that he expected to strike a “great deal” with China on trade, without elaborating.

“The CSRC is doing that to stabilise the market,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “But that’s more symbolic as it simply repeats what it always says. That may work temporarily to put a floor under the market, but the real market bottom may still be some distance from us.”

The Shanghai Composite advanced 25.95 points to 2,568.05. Still, the index was heading for a 9 per cent loss in October, the worst-performing month since January 2016.

A gauge of carmakers rose 1.4 per cent, according to financial data provider Shanghai DZH. Beiqi Foton jumped 9.9 per cent to 1.78 yuan and Great Wall Motor rallied 5.5 per cent to 6.12 yuan. SAIC Motor added 1.2 per cent to 27.42 yuan.

China is considering the tax cut to boost the world’s largest automotive market that is enduring the first sales decline in over two decades, according to a report by Bloomberg that cited anonymous sources.

The tax break will only be applied to cars with engines smaller than 1.6 litres, it said.

Ping An rose 1.3 per cent to 62.80 yuan. The company is due to hold an extraordinary shareholders’ meeting in December to vet the share buy-back plan, according to an exchange filing. The insurer also said in a separate Monday statement that third-quarter profit dropped 6.9 per cent from a year ago.

In Hong Kong, the Hang Seng Index fell 0.9 per cent, or 226.51 points, to 24,585.53. The Hang Seng China Enterprises Index slipped 0.1.

BOC Hong Kong Holdings tumbled 7 per cent to HK$29.45, becoming the biggest decliner on the benchmark gauge. The lender posted a slower increase in third-quarter profit and had its price target cut at Morgan Stanley. Hang Seng Bank slid 4.1 per cent to HK$182.10.

Carmakers gained. Geely Automobile Holdings, which owns Volvo and is the most valuable Hong Kong-listed automotive companies, rose 2.4 per cent to HK$13.94. BMW’s key Chinese partner Brilliance China Automotive Holdings gained 2.5 per cent to HK$6.51.