Chinese stocks ended the morning session on Monday near a seven-year high, as bullish investors moved more cash into stocks after regulators said the recent rally is “inevitable and rational’’.
Deng Ke, spokesman of the China Securities Regulatory Commission (CSRC), told a press conference late on Friday, after the market had notched eight straight days of gains, that the rise in stock prices was a reflection of ample liquidity and improvement in corporate earnings, and that healthy market development was good for economic restructuring.
Property stocks jumped on signs of policy easing, while the stellar debut of Orient Securities fanned buying interest in brokerage shares.
“Policy makers hope the stock market can rise, but in a steady and mild manner,’’ said Liu Ming, Beijng-based analyst at Golden Sun Securities.
“I don’t think the government will intervene at this stage, although there will be rising volatility ahead due to market forces.’’
Illegal margin trading biz
In January, China’s stock watchdog launched a crackdown on illegal margin trading businesses, dealing a blow to a stock market that soared more than 40 per cent during the last two months of 2014.
But now, with fears of regulatory intervention easing, the amount of leveraged stock purchases climbed to record highs, fuelling rises in stock prices.
The CSI300 index rose 1.9 per cent to 3,964.43 points at the end of the morning session, while the Shanghai Composite Index gained 1.6 per cent to 3,676.20 points.
Hong Kong stocks rose as well, taking cues also from bullish US and European markets on Friday. The Hang Seng index added 0.6 per cent.
The Shanghai Composite Index was up nearly 14 per cent this year, putting it among Asia’s best-performing major stock indices.
China’s major steel makers, including Shandong Iron and Steel Co Ltd, Wuhan Iron and Steel Co Ltd and Hebei Iron and Steel Co Ltd rose sharply, as investors bet they will benefit from Beijing’s newly-published plan to consolidate the industry with an aim to build three to five giant steel mills.
China’s Great Wall Motor rose 4.1 per cent after it reported a 10.2 per cent rise in its 2014 revenue, and also on news that its long-delayed H8 premiums SUV will be launched in April, potentially giving a boost to this year’s performance.