PBOC cash injection fuels rise in shares
Print Edition
SHANGHAI shares rose in light trading yesterday as the People’s Bank of China injected cash into the financial system ahead of a week-long closure of the market for the Spring Festival holiday.
The Shanghai Composite Index rose 2.26 percent to close at 2,749.57 points.
Shares of Inspur Software Co surging by the 10 percent daily limit to 31.56 yuan (US$4.79) while Shanghai U9 game Co rose 5.58 percent to 19.67 yuan.
The PBOC pumped in 100 billion yuan into the banking system using reverse repurchase agreements, or repos, yesterday, adding to last month’s injection of about 2 trillion yuan. The move followed a reverse repo of 10 billion yuan on Monday and a net injection of 690 billion yuan via such operations last week in order to meet rising demand for cash ahead of the holiday which starts on Monday.
“The injection is lending some support to the market,” Ronald Wan, CEO at Partners Capital International, told Bloomberg News. “But I rather would remain cautious as the rally isn’t likely to be long lived. People will want to sell equities for cash before the holidays and volatility will come back.”
The Shanghai gauge fell 22.7 percent so far this year, posting the worst performance among other global markets.
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