Rate cut continues to fuel shares
Print Edition
SHANGHAI stocks yesterday kept the momentum triggered by the central bank’s weekend rate cut. Wind power companies and other new energy producers also surged after the central government pledged to promote energy efficiency in traditional manufacturing sectors.
The Shanghai Composite Index rose 1.56 percent to 4,401.22 points, after a 3 percent gain on Monday.
Effective Monday, the People’s Bank of China cut both the one-year benchmark lending rate by 25 basis points to 5.1 percent and the one-year deposit rate by a quarter of a percentage point to 2.25 percent.
Pingan Securities said more funds are set to flow into the stock market, increasing liquidity after the interest cut reduced financing costs.
Nomura Securities said the Chinese economy appears to still be fragile and requires further policy easing. The commentary pointed to weak reading on key data in factory activity for April.
Nomura predicts two more interest rate cuts of at least 25 basis points by the end of the 2015.
Brokerage firms rose for a second day on hopes that more liquidity in the financial system will increase investment in equities. Sinolink Securities gained 8.16 percent to 28.11 yuan.
New energy companies soared after the Ministry of Industry and Information Technology said on Friday that China plans to reduce energy use in steel, chemicals, paper and building materials sectors.
GD Power Development Co and China XD Electric Co both surged by the daily trading limit of 10 percent to 7.22 yuan and 11.74 yuan respectively.
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