China: Stocks rally most in a week on state fund support
[SHANGHAI] Chinese stocks rose the most in a week amid speculation the government is boosting funds to support the world's second-largest equity market.
The Shanghai Composite Index advanced 3.5 per cent to 3,957.35 at the close, erasing a weekly drop. The Shenzhen Composite Index climbed 5 per cent, its biggest gain since 2012. China Securities Finance Corp, a state-backed agency that provides margin finance and liquidity to the stock market, has 2.5 trillion yuan to 3 trillion yuan on tap to support shares, people familiar with matter said.
The support "shows there's plenty of ammunition in the market," Zhang Qi, an analyst at Haitong Securities Co, said by phone. "The positive news, though not verified by official channels, offers a boost to market sentiment as investor expectations have changed after the earlier sell-off."
Funding will be used to offer liquidity support to brokerages and to purchase stocks and mutual funds, the people said. The latest measure comes after policy makers banned large shareholders from selling stakes, ordered state-run institutions to buy equities and suspended initial public offerings to halt a rout that erased almost US$4 trillion.
Caijing earlier reported Friday seventeen banks have granted a credit line of 2 trillion yuan to China Securities Finance.
A total of 545 stocks were halted on mainland exchanges Friday, about 19 per cent of all listings, down from more than 1,300 at the end of last week.
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