Shares in biggest rally in 7 weeks
Print Edition
SHANGHAI shares yesterday staged the biggest rally in seven weeks after sentiment was lifted by a comment that was originally made by People’s Bank of China Governor Zhou Xiaochuan in May that a stock link between Shenzhen and Hong Kong is coming this year.
The Shanghai Composite Index leapt 4.3 percent, the biggest gain since September 16, to 3,459.64 points.
Zhou said in an article posted on the central bank’s website yesterday that the Shenzhen-Hong Kong Stock Connect would start this year. Investors interpreted his comment as a signal that China will continue financial reform despite the stock market rout in the summer.
All 23 brokerages listed in Shanghai and Shenzhen surged by the daily limit of 10 percent even after the PBOC later clarified that Zhou’s comments were made on May 27, before a market rout started in mid-June, which many analysts believed would delay the launch of the Shenzhen-Hong Kong Stock Connect.
“After days of consolidation, the market saw an inflow of capital driven by a number of factors including optimism over the Shenzhen-Hong Kong stock link,” said Wu Hairong, analyst with Hengtai Securities.
An unexpected meeting between President Xi Jinping and Taiwan leader Ma Ying-jeou in Singapore on Saturday lifted shares linked to Fujian Province, which plays a key role in cross-Strait trade. Fujian Cement Inc, Xiamen International Airport and Fujian Expressway Development all rose by the 10 percent daily cap.
The upbeat Caixin Business Activity Index, a gauge of operating conditions in private service firms, also boosted sentiment.
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