Chinese Stocks Rise to Three-Week High on Economy-Boosting Steps

China’s stocks rose, sending the benchmark index to the highest level in three weeks, after the government accelerated measures to prevent a deeper slowdown in the world’s second-biggest economy.

The Shanghai Composite Index gained 1.1 percent to 2,867.34 at the close, led by industrial and technology companies. The gauge jumped 3.3 percent on Tuesday following data that showed the nation’s banks doled out a record amount of loans in January. Defense-related companies rallied amid increased tensions in the South China Sea.

China is stepping up support for the economy by ramping up spending and considering new measures to boost bank lending. The nation’s chief planning agency is making more money available to local governments to fund new infrastructure projects, according to people familiar with the matter, while the cabinet has discussed lowering the minimum ratio of provisions that banks must set aside for bad loans. The economy grew by 6.8 percent last quarter, the slowest pace since the global financial crisis.

The Shanghai Composite has fallen 19 percent this year, the most among global benchmark indexes after Greece and Italy, on concern the slowdown and the yuan’s depreciation will exacerbate capital outflows. It is valued at 11.4 times 12-month projected earnings, down from the six-year high of 19 set in June, according to data compiled by Bloomberg.

Source: Bloomberg