China’s Stocks Defy Brexit Turmoil as Coal, Steel Shares Advance

Mainland Chinese stocks advanced the most among emerging markets in Asia, with energy and materials companies pacing gains after policy makers said they will reduce overcapacity in the coal and steel industries.

The Shanghai Composite Index added 0.7 percent. China Shenhua Energy Co. climbed to a seven-week high after the head of the National Development and Reform Commission said the nation will cut coal capacity this year by about 7.5 percent to curb pollution and eliminate so-called “zombie” companies in the struggling industry. Angang Steel Co. rose the most in nearly four months after the NDRC said it also plans to shed 45 million tons of steel capacity this year. The ChiNext index of small-company shares added 1.5 percent.

The advances in mainland equities contrasted with losses in most other Asian markets after the U.K.’s vote to leave the European Union increased anxiety among investors around the world. The markets have overreacted to the so-called Brexit and need to calm down, China’s Finance Minister Lou Jiwei said in Beijing over the weekend.

The Shanghai Composite traded at 2,874.92 as of 11:11 a.m. local time. The CSI 300 Index advanced 0.7 percent, with gauges of consumer-staples and energy companies rising at least 1.6 percent among industry groups. The MSCI Emerging Markets Index fell 0.8 percent, while the Hang Seng China Enterprises Index of mainland companies traded in Hong Kong lost 0.7 percent.

Source: Bloomberg

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China Stocks Advance as Coal and Steel Shares Gain on Capacity Cuts

China’s stocks rose, extending a weekly gain, as coal and steel producers advanced after the government pledged to further cut overcapacity and excess labor in those industries.

The Shanghai Composite Index climbed 0.8 percent to 2,938.52 at the close. Angang Steel Co. and Shanxi Lu’an Environmental Energy Development Co. jumped more than 6 percent as policy makers unveiled details of supply-side reforms, including targeting further reductions in crude steel production capacity by as much as 150 million tons and “large scale” cutbacks in coal output. The offshore yuan rose and benchmark money-market rates fell. Hong Kong’s Hang Seng China Enterprises Index advanced 1.5 percent at 3:03 p.m.

China has vowed in the past to curb overcapacity in industries such as coal and steel, which has dragged down the world’s second-largest economy. The Shanghai Composite has fallen 17 percent this year, making it the worst-performing major global benchmarks tracked by Bloomberg, amid concern about the government’s ability to manage the economy and yuan volatility, along with a steep decline in leverage.

Source: Bloomberg