Daily Report | Mainland China stocks rally late to close higher as data fuels easing hopes
Hong Kong’s Hang Seng Index ends day 1.6 per cent higher
Mainland Chinese stocks staged a late day rally on Tuesday, pushing the Shanghai Composite Index up at the close, as investors welcomed a surprise reserve requirement rate cut by the People’s Bank of China (PBOC) to boost the economy, with worse-than-expected manufacturing data fuelling hopes for further monetary easing.
The Shanghai Composite Index advanced 1.7 per cent or 45.19 points to close at 2,733.17, rebounding from a 2.9 per cent loss on Monday.
The large-cap CSI 300 Index rose 1.9 per cent or 53.22 points to 2,930.69. The Shenzhen Composite Index gained 2.3 per cent or 38.12 points at 1,681.47, and the ChiNext Index jumped 2.9 per cent or 54.77 points to 1,934.92.
Stocks were choppy in the morning, after two key gauges of the mainland’s manufacturing sector came in worse than expected. However, banking and property shares staged a strong rebound in the afternoon, pushing the Shanghai Composite sharply higher at close.
We see the cut as a clear signal – amid significant confusion about the policy stance recently – that monetary policy has loosened
In Hong Kong, the Hang Seng Index reversed brief early losses in the afternoon and closed 1.6 per cent or 295.53 points higher at 19,407.46. The Hang Seng China Enterprises Index climbed 1.9 per cent or 151.95 points to 8,068.29.
The PBOC surprised markets with an announcement late on Monday that it would cut the reserve requirement ratio (RRR) by 50 basis points for all financial institutions from Tuesday, a measure seen as a bid to boost bank lending amid a faltering economy and to support share prices ahead of key legislative and advisory meetings in Beijing later this week.
