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China’s main share index ended at a two-week high on Monday, but pared some of its earlier gains in thin turnover as investors were reluctant to stake outfresh positions ahead of the country’s biggest holiday.
Most sectors were largely unchanged but the gains were led by the materials sector, underpinned by a broadly weaker US dollar.
The Shanghai Composite Index gained 0.4 per cent to 3,136.77 points, while the blue-chip CSI300 index rose 0.3 per cent to 3,364.08 points.
The People’s Bank of China had said on Friday it would provide temporary liquidity support for 28 days to several major banks to address seasonal liquidity stress ahead of the Lunar NewYear, a new policy tool designed to ease cash shortages.
The stock market will be closed from January 27 to February 2.
State media reported on Monday that the move signalled stable and neutral monetary policy.
“Given the rising inflation and stable growth, the focus of monetary policy is unlikely to move away from containing financial risk for now,” Larry Hu and Jerry Peng from Macquarie Securities wrote in a research note.
Among best thematic gainers were defence stocks, which added 1.3 per cent, after news President Xi Jinping would head a new commission overseeing joint military and civilian development.
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