China stocks rise after PBOC takes measures to ease cash squeeze

By KH디지털2

Published : Jan. 21, 2016 - 14:05

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China’s stocks rose for the third time in four days, led by small-company shares, after the central bank injected the most cash in almost three years in its open-market operations to ease a cash squeeze.

The Shanghai Composite Index climbed 0.5 percent at the break, erasing a loss of as much as 1.6 percent. The ChiNext index of small caps advanced 1.5 percent, while gauges of health-care and technology shares posted the biggest gains among industry groups. Hong Kong’s Hang Seng China Enterprises added 0.2 percent by noon as the city’s currency gained.

AP-Yonhap

China is trying to hold borrowing costs down to support its economy without spurring an exodus of funds that drove the yuan to a five-year low this month. A gauge of interbank funding availability jumped the most in 13 months on Wednesday, ahead of next month’s Chinese New Year holiday.

China’s central bank “is trying to put liquidity back in the financial system after capital outflows and ahead of the lunar New Year holidays,” said William Wong, head of sales trading at Shenwan Hongyuan Group Co. in Hong Kong. “Sentiment is volatile and it will take some time to restore investor confidence.”

The Shanghai Composite has rebounded since entering a bear market on Friday amid speculation the government will add to monetary and fiscal stimulus after data this week showed economic momentum weakening towards the end of last year.

Chinese stocks have been among the world’s worst performers this year as the weakest economic growth in a quarter century and a depreciating yuan fueled capital outflows. The Hang Seng China index and the Shanghai Composite have both lost at least 15 percent, versus a 10 percent drop in the MSCI All-Country World Index.

The People’s Bank of China said Thursday it conducted 110 billion yuan ($16.7 billion) of seven-day reverse-repurchase agreements and 290 billion yuan of 28-day contracts.

Hualan Biological Engineering Inc. led the advance for drug stocks, surging 8.1 percent. Hundsun Technologies Inc. rose 3.4 percent. Hithink RoyalFlush Information Network Co. jumped 3.3 percent and contributed the most to gains in the ChiNext.

In Hong Kong, energy producers paced the advance. PetroChina Co., which slid to a 11-year low on Wednesday, and China Petroleum & Chemical Corp. advanced at least 1.4 percent. The Hong Kong dollar increased the most since 2011.

The Hong Kong dollar’s rebound “may have helped sentiment as it signals that the HKMA is in the fray to defend the peg,” said Bernard Aw, a strategist at IG Asia Pte in Singapore.

Hong Kong’s Hang Seng Index rose 0.3 percent after tumbling to a three-year low on Wednesday. The CSI 300 Index added 0.7 percent. (Bloomberg)

China stocks rise after PBOC takes measures to ease cash squeeze

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