PBOC helps shares hit fresh high
Print Edition
SHANGHAI stocks soared to a fresh seven-year high yesterday, as China’s central bank extended a medium-term lending facility (MLF) to ensure liquidity in the market.
The Shanghai Composite Index rose 2.13 percent to 3,577.3 points, the highest since May 19, 2008, when the index closed at 3,604.76.
The People’s Bank of China has extended the term of the MLF valued at 500 billion yuan (US$80 billion) that was due this month. The MLF targets joint-stock commercial banks, city commercial banks and rural commercial banks.
The move was seen as a means to further ease liquidity problem and signaled that policy-makers were ready to use additional monetary instruments to boost the economy.
Market sentiment was strong as the liquidity injection raised expectations of further cuts in interest rates or the reserve requirement ratio for banks, said Chen Wei, an analyst with CITIC Securities.
The Agricultural Bank of China jumped 3.53 percent to 3.52 yuan, and China Construction Bank gained 3.04 percent to 6.11 yuan.
China Everbright Bank surged 9.5 percent, the most this year, to 4.84 yuan after media reports said the bank is considering spinning off its wealth-management business.
Steel companies also rallied because steel demand had begun to increase since last week, especially in north China, according to Qilu Securities said. The market is anticipating a rise in the steel price on growing demand.
Xinjiang Ba Yi Iron & Steel Co and Fangda Special Steel Technology Co rallied by the daily 10 percent limit to 6.99 yuan and 6.23 yuan. Xining Special Steel rose 9.93 percent to 6.31 yuan.
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