Chinese stocks recovered from Monday’s plunge to post their biggest weekly gain this year on signs of state intervention before the start of annual policy meetings.
The Shanghai Composite Index climbed for a fourth day to end the week 3.9 percent higher. PetroChina Co., long suspected to be a target of state-backed fund buying because of its large weighting in the gauge, led a rally by large-cap shares. A gauge of smaller shares declined.
The Shanghai Composite tumbled as much as 4.6 percent on Monday on disappointment over the lack of policy announcements during the Group of 20 meetings in Shanghai. While they ended higher on Tuesday after the central bank cut the reserve ratio for banks, all the gains came in the last 90 minutes in trading, a pattern reminiscent of last year when authorities regularly intervened to support the stock market. A gauge of large-cap shares rallied 2.9 percent on Friday, even as the ChiNext index of the smallest companies tumbled 5 percent.
China’s stocks rose in volatile trade as state-backed funds were said to intervene after a plunge on Monday wiped out $ 590 billion of market value.
The CSI 300 Index advanced 0.3 percent at the close after swinging between a gain of 1.4 percent and a loss of 2.7 percent. Trading was halted on Monday after the gauge plunged 7 percent, triggering new market circuit breakers that some analysts said exacerbated the sell-off.
State-controlled funds bought equities and the securities regulator signaled a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter. The China Securities Regulatory Commission also suggested it’s open to tweaking the circuit breakers, while the central bank conducted the biggest reverse-repurchase operations since September.
The Shanghai Composite Index lost 0.3 percent, while the Hang Seng China Enterprises Index retreated 0.8 percent at 3:33 p.m., extending its steepest decline since August on Monday.
Equities slumped worldwide on Monday in the wake of the selloff in mainland equities. Chinese stocks’ influence on global markets has increased after the nation’s $ 5 trillion equity market rout, when the Shanghai gauge tumbled more than 40 percent from mid-June through its August low, rattled investor confidence in the world’s second-largest economy.