Shanghai

CHINESE stocks rebounded from the worst week of the year amid signs an economic recovery was firming, with banks and insurers leading gains by large caps. Sovereign bonds fell.

The SSE 50 Index of some of China's biggest stocks rose 1.5 per cent as at 1:06 p.m. in Shanghai. The Hang Seng China Enterprises Index touched its highest level since June last year before paring the advance to 0.8 per cent. New China Life Insurance Co led gains on both gauges.

Investors were content to take profits last week from the best-performing stocks in the world in 2019. After trading ended on Friday, the People's Bank of China released credit data that suggested growth exceeded all estimates in March. Risk sentiment is also being boosted by signs the US and China are nearing a trade deal after Treasury Secretary Steven Mnuchin said the US is open to facing "repercussions" if it doesn't live up to its commitments.

"The credit data lifted expectations on market liquidity and economic fundamentals," said Wang Jianhui, a Beijing-based analyst with Capital Securities Co. "It provided an excuse for investors who wanted to bottom fish stocks after last week's correction." The yield on China's 10-year government bonds rose four basis points to 3.39 per cent, the highest since December. The yield has climbed 11 basis points in the past two sessions.

The Hang Seng China gauge rose as much as 1.8 per cent in the morning before paring the gain to 0.7 per cent. The measure of offshore China stocks is close to a 20 per cent advance from its low in January. The Shanghai Composite Index climbed 1.2 per cent on Monday after last week's 1.8 per cent tumble. The Hang Seng Index rose 0.6 per cent.

China's aggregate financing was 2.86 trillion yuan (S$576.5 billion) in March, compared with about 700 billion yuan in February, the central bank said Friday. The median estimate was 1.85 trillion yuan in a Bloomberg survey.

The Chinese government is confident of achieving this year's main targets including economic growth of between 6 per cent and 6.5 per cent, Premier Li Keqiang said on Friday at a business forum in Dubrovnik, Croatia. Capital markets are also more active, indicating market participants' expectations have "improved noticeably", according to a transcript of Li's comments on the government's website.

New China Life Insurance rose 6.9 per cent on the mainland and 5.4 per cent in Hong Kong Lenders were also among the top performers on both sides of the border. Industrial Bank Co added 3.4 per cent in Shanghai, while Postal Savings Bank of China Co added 2.6 per cent in Hong Kong; Chinese banks, especially smaller ones, could see earnings beat in the first quarter as they benefit from strong credit growth, a better bad-loan trend and ample liquidity, according to Citigroup analysts. BLOOMBERG