[ad_1]
(Bloomberg) –
Chinese stocks rallied the most in ten weeks as traders turned to buyers of everything from baijiu producers to construction companies amid expectations of more support for the economy.
The benchmark CSI 300 index rose 2.6%, its best day since May 25. Consumer stocks led the gains, with Kweichow Moutai Co. and Wuliangye Yibin Co. adding at least 4.5%. In Hong Kong, the Hang Seng index gained 1.1%.
Monday’s hike follows a much-watched Politburo meeting on Friday, which indicated that authorities would likely take more action to help struggling small businesses, increase budget spending and possibly lower the reserve requirement ratio again for banks. Bets on further easing boosted Chinese sovereign bonds.
“Some investors are buying dips thinking most of the bad regulatory news is behind them,” said Margaret Yang, strategist at DailyFX in Singapore. “It was oversold. The resurgence of virus cases also helps hope that the PBOC can ease policy in the second half of the year. “
The gains follow a volatile week for the world’s second-largest stock market, after a ban on entire sections of the tutoring industry from making profits raised fears that other industries could be targeted.
As China continued to tighten rules on tech companies on Friday, there were attempts to narrow its crackdown, with the securities regulator meeting with banks to reassure them.
“The Politburo meeting once again emphasized stability, so that the decline in stocks will not be too large,” said Chen Shi, fund manager at Shanghai Jade Stone Investment Management Co. in discussions with his US counterpart on the initial public offerings are reassuring, Chen said.
The Chinese securities regulator on Sunday called for talks with its US counterpart after the US Securities and Exchange Commission increased disclosure requirements for IPOs of Chinese companies. CICC analysts noted that this could “further promote listings in Hong Kong.” Hong Kong Exchanges & Clearing Ltd. increased by 4.3%.
Infrastructure-related stocks were among the main winners on Monday, after the Politburo meeting signaled that the sale of special local government bonds will help accelerate second-half budget spending to support the economy. Construction stocks rose as Sany Heavy Industry Co. rose from the 10% daily limit in Shanghai.
Chinese steel inventories have plummeted, some of them dropping by around 10% each, after a leading industry body said there could be larger cuts in crude steel production as the government strives to reduce emissions in key sectors. Shares of Baoshan Iron & Steel Co., the industry’s barometer for market value, fell 9.7%, the highest since February 2020. Angang Steel Co. fell 9.9% in continental trading .
Read: China’s largest steel company expects larger production cuts as demand slows
The rally in Chinese government bonds accelerated, as the yield on 10-year sovereign bonds fell 5 basis points to 2.8%, the lowest since June 2020. Futures on government bonds State 10 years extended last week’s recovery, rising to a new one-year high.
(Updates everywhere)
More stories like this are available at bloomberg.com
Subscribe now to stay ahead of the game with the most trusted source of business information.
© 2021 Bloomberg LP
[ad_2]
Source link