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Shares surge 1.76% on liquidity expectations
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Shanghai stocks rose for the second trading day after a weeklong Chinese New Year holiday amid optimism over liquidity supply.
The Shanghai Composite Index surged 1.76 percent to 2,080.49 points, the highest in a month, by the noon break.
The People’s Bank of China said over the weekend that it will use a combination of policy tools to keep liquidity at an appropriate level to ensure reasonable growth in credit and social financing.
“Monetary policy is expected to be more vigorous to avoid liquidity squeeze. The central bank may inject more cash through open market operations this year. Meanwhile, reserve requirements for commercial banks may be lowered,” the Bank of Communications said in a note.
Lenders advanced by an average of 1.24 percent by midday. China CITIC Bank rose 3.3 percent to 3.76 yuan (US$0.62). Bank of Communications, the fifth-biggest lender in China, gained 0.8 percent to 3.8 yuan. ICBC, the country’s biggest bank, added 0.6 percent to 3.42 yuan.
Automobile stocks led the rally as the government extended subsidies for electric cars.
This year’s subsidies will be cut by 5 percent, less than previously announced 10 percent. The subsidies for next year will be cut by 10 percent, instead of 20 percent, according to a joint statement by the Ministry of Finance, the National Development and Reform Commission and the Ministry of Industry and Information Technology.
Dongfeng Automobile Co jumped 3.9 percent to 3 yuan. SAIC Motor Co climbed 3.6 percent to 13.41 yuan. Guangzhou Automobile Group Co surged 5.8 percent to 7.9 yuan.
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