China blue-chips leap most in nine months, some sense state support
Reuters
Published May 25, 2017 06:27AM ET
China blue-chips leap most in nine months, some sense state support
SHANGHAI (Reuters) - China stocks rose sharply on Thursday, as the blue-chip CSI300 index posted its best day in more than nine months despite the surprise decision by Moody's to downgrade the country's sovereign credit rating a day earlier.
Traders cited growing hopes that global index provider MSCI Inc would add mainland Chinese shares to its benchmark next month, and some also hinted that state-directed buying might have helped prop up the market.
One stock analyst at a Chinese securities company said there was "national will" on Thursday for the market to go up.
The blue-chip CSI300 index (CSI300) rose 1.8 percent, its biggest gain since Aug. 15, and ended at 3,485.66 points, its highest close in more than a month.
The Shanghai Composite Index (SSEC) advanced 1.4 percent to 3,107.83 points.
Chinese stocks also rose a touch on Wednesday after Moody's clipped China's credit rating by one notch, prompting official criticism.
The strongest performers in China's markets on Thursday were banking <.CSI300BI> and real estate stocks <.CSI300REI>, whose indexes jumped 3.3 percent and 4.0 percent, respectively.
The SSE (LON:SSE) 50 (SSE50) - dubbed China's "Nifty Fifty" index - leaped 2.7 percent to close at a near 17-month high.
Meanwhile, China's Nasdaq-style board ChiNext <.CHINEXTP> inched up 0.1 percent, reversing earlier losses to follow the broader market higher.
State intervention in financial markets is not unheard of in China. During the market rout of mid-2015, a band of government-backed investors, dubbed the "National Team", was ordered to try to stop the bleeding by buying stocks.
There was some speculation online that the National Team was at it again in the wake of the downgrade.
Stirring memories of the government-orchestrated campaign in 2015 to prop up stocks, 20 companies said late on Wednesday that their major shareholders planned to increase their holdings, the state-owned newspaper Securities Times reported.
In the foreign exchange market on Thursday, traders said they saw major state-owned banks selling dollars, which helped push the yuan
Expectations were building that MSCI (N:MSCI) will announce China's inclusion in its Emerging Markets Index when it issues its annual classification review on June 20.
Snubbing China last year, MSCI cited concerns over share suspension rules and monthly limits on repatriating capital.
China Securities Co., a brokerage, said in a report on Wednesday: "The chance of an A-share inclusion into MSCI has risen drastically for 2017."
Get The News You Want
The brokerage encouraged continued buying of leading blue-chips, which have already outperformed small-caps this year.
JP Morgan, China International Capital Corp and BlackRock have also expressed optimism over prospects that A shares could be included by MSCI this year.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.