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China: Stocks surge 4%, post best day in seven weeks
[SHANGHAI] China's stocks posted their best daily gain in seven weeks on Wednesday, buoyed by expectations that a trading link between Hong Kong and Shenzhen stock markets would be launched before the year-end.
The market was also underpinned earlier by comments from China President Xi Jinping on the economy and Beijing's proposal of its 13th five-year plan, a blue-print for economic and social development between 2016 and 2020.
The optimism over the stock connect scheme continued even after the Hong Kong Exchanges and Clearing clarified that the plan was still subject to regulatory approval.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen surged 4.7 per cent, to 3,628.54, while the Shanghai Composite Index jumped 4.3 per cent, to 3,459.64 points. Both indexes chalked up their best daily rise since Sept 16.
"Sentiment was boosted by news of the Shenzhen Hong Kong connect exchange, which could attract more money and fund injections to the market," said Du Changchun, an analyst at Northeast Securities in Shanghai.
However, Mr Du warned that the high valuation of small-cap stocks may curb the upside for stocks.
Open interest also surged to their highest since late August, suggesting traders were hunting for positive news for the market after a crash since mid-June.
Shenzhen's start-up board ChiNext soared nearly 6 per cent. The CSI300 information technology sector index surged 6.4 per cent and the telecommunication index advanced 5.1 per cent.