Economic news

China stocks extend bounce on regulatory change-of-guard

2024.02.08 00:02


© Reuters. FILE PHOTO: Cars journey previous a show exhibiting Shanghai and Shenzhen inventory indexes close to the Shanghai Tower and different skyscrapers on the Lujiazui monetary district in Shanghai, China February 5, 2024. REUTERS/Xihao Jiang/File Photo

By Rae Wee

SINGAPORE (Reuters) – Beaten-up Chinese stocks have been set for a fourth day of acquire on Thursday after a change of management on the market regulator, shoring up expectation of additional help measures as China heads into an extended Lunar New Year vacation this week.

The blue-chip CSI 300 Index pulled additional away from final week’s five-year low after recent vows of help by state-linked consumers and Bloomberg reporting that President Xi Jinping would meet regulators earlier this week.

The cupboard on Wednesday mentioned it could exchange China Securities Regulatory Commission Chairman Yi Huiman with Wu Qing, a securities regulator veteran who has led the Shanghai Stock Exchange and is thought for his robust line on market malpractice.

Meanwhile, inflation knowledge underscored the problem regulators have in stabilising markets whereas the financial system continues to wobble. China is mired in disinflation, with knowledge on Thursday exhibiting shopper costs declined for a fourth consecutive month in January.

Producer costs additionally dropped, pointing to a still-fragile restoration on this planet’s second-largest financial system.

A raft of regulatory measures to defend the inventory market this yr – resembling suspending brokerages from borrowing shares for lending, curbing margin-lending and different derivatives, and even getting exchanges to halt promoting by hedge funds – have barely helped.

State fund Central Huijin Investment has additionally stepped up funding in inventory exchange-traded funds (ETFs).

“It seems that Beijing has noticed the sharply falling stock market,” mentioned portfolio supervisor Rob Brewis at UK-based Aubrey Capital Management.

“Hard to say how effective the new man is until we see some policies… (It) won’t impact the economy or property market which seems to be the major problem, but might well instigate a bounce in the stock market.”

As the closes in on the magic 5,000 stage [.N], Chinese blue chips have fallen for six months in a row – a mirrored image of the push of cash fleeing China’s crumbling inventory markets.

Despite a rally prior to now three classes, the CSI 300 is down greater than 2% for the yr.

The jumped 0.7% on Thursday, having risen greater than 4% for the week to date, however stays 4% decrease within the yr so far. [.SS]

The central financial institution has additionally been busy making an attempt to defend the yuan amid the inventory market rout. [FRX/]

The People’s Bank of China on Thursday set the midpoint price round which it permits the yuan to commerce – in a 2% band – at 7.1063 per U.S. greenback, 848 pips firmer than market estimates.

The final stood at 7.1927 a greenback, little modified following the discharge of inflation figures.

Its offshore counterpart rose 0.1% to 7.2045 per greenback.

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