Chinese stocks rallied, sending the benchmark index to its biggest gain in a week, amid speculation the government is boosting funds to support the world’s second-largest equity market.
The Shanghai Composite Index rose 3.5 percent to 3,957.35 at the close, erasing a weekly drop. The Shenzhen Composite Index climbed 5 percent, the most since 2012, as technology shares rallied. China Securities Finance Corp., a state-backed agency that provides margin finance and liquidity to the market, has 2.5 trillion yuan to 3 trillion yuan ($ 483 billion) on tap to support stocks, people familiar with the matter said.
Funding will be used to offer liquidity support to brokerages and to purchase stocks and mutual funds, the people said. Caijing earlier reported 17 banks granted a credit line of 2 trillion yuan to China Securities Finance. The latest measure comes after policy makers banned large shareholders from selling stakes, ordered state-run institutions to buy equities and suspended initial public offerings to halt a rout that erased almost $ 4 trillion.
The Shanghai Composite rebounded 9 percent from July 8 through July 16 after tumbling 32 percent in a month as investors unwound margin-debt positions. A total of 635 stocks were halted on mainland exchanges Friday, about 22 percent of all listings, down from more than 1,300 at the end of last week.
Source : Bloomberg