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Shares rally before US rate decision
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SHANGHAI shares jumped nearly 5 percent yesterday to reverse the biggest two-day decline in three weeks, on speculation that the central government might have intervened in the market ahead of the US Federal Reserve’s interest rate decision.
The Shanghai Composite Index surged 4.89 percent to 3,152.26 points, with all of its gains coming in the last hour of trading yesterday.
The index’s rebound halted a 6.1 percent loss in the previous two trading days, helped by technology stocks which rallied 9.4 percent to notch the biggest rise among sectors.
“I suspect state support may be behind the sharp rally in the final hour,” Bernard Aw, a strategist at IG Asia Pte in Singapore, told Bloomberg News. “The index surged over 5 percent in an hour. This is huge.”
Other analysts like Haitong Securities Co’s Zhang Qi said investors chose to buy in before the Fed’s meeting today, which will decide whether the world’s biggest economy will raise interest rates for the first time in nine years.
But Zhang said the market consensus is the “Fed will not raise interest rates this time.”
Dylan Cheang, Asian equities strategist with DBS, also said in a note yesterday that the rate hike is unlikely this week as the Fed is likely to study closely how economic weakness and financial market turbulence in emerging markets, particularly China, will impact the US.
Yonyou Network Technology Co rose by the 10 percent daily limit to 24.22 yuan (US$3.8), rebounding from its lowest close since January 5. Dr Peng Telecom & Media Group Co jumped by the daily limit to 21.08 yuan.
Meanwhile, the crackdown on Citic Securities Co continued as its President Cheng Boming is being investigated by the police for insider trading, Xinhua news agency reported.
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