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Shanghai index up 0.86%, helped by cash infusion
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SHANGHAI stocks recovered from its lowest level in more than five months as China’s borrowing costs fell after the central bank injected liquidity into the market.
The benchmark Shanghai Composite Index added 0.86 percent, or 17.06 points, to 2,008.31. Daily turnover was 52 billion yuan (US$8.5 billion).
The People’s Bank of China today injected 75 billion yuan into the country’s banking system via seven-day reverse repurchase agreements and another 180 billion yuan through 21-day repos, the central bank said in a statement on its website.
The seven-day Shanghai Interbank Offered Rate, a gauge of funding costs, fell 79.40 basis points to 5.54 percent after the liquidity injection, data from the National Interbank Funding Center showed.
“Investors are very sensitive to the fluctuation of money rates after China’s capital market experienced two liquidity crunches last year,” CITIC Securities said in a note.
The index tumbled below 2,000 points yesterday on hiking borrowing costs and signs of moderating economic growth.
CITIC Securities said the market is likely to decline again amid gloomy outlook and tight liquidity due to seasonal factors.
Lenders cheered the liquidity injection. Shanghai Pudong Development Bank Co Ltd added 1 percent to 9.16 yuan. Industrial Bank Co Ltd rose 0.9 percent to 9.29 yuan.
Brokerages also gained. CITIC Securities, China’s biggest listed broker, gained 1.7 percent to 11.71 yuan. Haitong Securities added 2.5 percent to 10.44 yuan. Founder Securities increased 4.7 percent to 5.58 yuan.
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