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Business / Markets

Stocks surge as policy support widens

By Dai Tian (chinadaily.com.cn) Updated: 2015-07-09 16:24
Stocks surge as policy support widens

A Chinese investor watches a display showing prices of shares at a stock brokerage house in Nangjing city, East China's Jiangsu province, July 9, 2015.[Photo/IC]

Stocks surged on Thursday, with the benchmark Shanghai index capping its biggest gain since 2009, as more policies came to shore up the country's tumbling market and latest data eased deflationary concerns.

The Shanghai Composite Index closed at 3,709.33, up 5.8 percent, after swinging 375 points, while the tech-heavy Shenzhen Component Index gained 4.3 percent to 11,510.34.

More than 1,200 stocks rose by the daily limit of 10 percent. Another 1,439 or 50 percent of the listed companies were suspended from trading over the past two days amid the rout that according to Bloomberg wiped away $3.9 trillion of value from the world's second-largest equity market.

Brokerages, highway and railway infrastructure and nuclear utility sectors led the gains on Thursday.

Brokerage giants, including CITIC Securities, Guotai Junan, Haitong Securities, Merchants' Securities and Guosen Securities, all rallied by the daily limit.

The rebound came as data on Thursday showed China's consumer-price index rose 1.4 percent year-on-year in June, beating a consensus estimate of 1.3 percent and easing deflation pressure.

The inflation gauge rose 1.3 percent in the first half of the year, according to the National Bureau of Statistics.

Sinopec Corp rallied 6.3 percent after the State-owned oil giant announced Sinopec Group bought 46 million of its Shanghai-listed shares, and pledged to buy a maximum of 2 percent of shares, including Wednesday's purchase, in the coming 12 months.

Shenhua Energy Co gained 10 percent, after the country's top coal miner also announced an increase of holdings from its parent group that bought 8.02 million of its Shanghai-listed shares.

The moves came as the China Securities Regulatory Commission encouraged major shareholders and senior managers to steady stock prices by buying more shares.

According to Xinhua, the police has joined securities watchdog to check possible leads on "malicious short selling" and crack down market manipulations.

Central bank made voice again on Thursday morning after vowing liquidity support to help stabilize the stock market, saying it has provided sufficient re-lending to China Securities Finance Corp (CSF).

The State-owned CSF, founded as the only institution to offer margin financing loans to brokerages, has pledged credit of 260 billion yuan ($42 billion) for 21 securities firms to purchase shares on the market, said the central bank in an open release.

The People's Bank of China will continue to support liquidity need, said the statement, adding that the central bank has also granted the CSF to issue short-term bonds in the interbank market to replenish capital.

The rally of Shanghai gauge narrowed its retreat from the June 12 peak to 28 percent.

The CSI 300 index rose 6.4 percent on Thursday to close at 3,897.63.

Xinhua contributed to this story.

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