Xiongan trade again drives stocks higher

Chinese mainland stocks reversed early losses to end in the black on Tuesday, with the benchmark Shanghai index closing at a 15- month high.

Strong gains in stocks related to the Xiongan New Area underpinned the market, even as investors continued to retreat from small caps over regulatory concerns.

The blue- chip CSI 300 index rose 0.35 percent to 3,517.33 points.

The benchmark Shanghai Composite Index added 0.6 percent to 3,288.97 points, while the Shenzhen Component Index closed 0.50 percent higher at 10,655.79 points.

Stocks and sectors expected to benefit from the recently launched Xiongan New Area continued to grab attention, with shares in around 30 listed companies rocketing 61 percent in just five sessions.

“The Xiongan New Area could prove to be a big investment theme this year,” said Zhang Gang, an analyst with China Central Securities.

He noted investors should avoid smaller caps, in particular those companies that award bonus shares instead of cash dividends, echoing China’s top securities regulator who vowed to punish stingy “iron roosters” that gave investors no cash return.

Banks continued to drag on the market after the country’s banking regulator said it had issued guidelines on risk control for lenders as authorities increased their efforts to contain risks from a rapid build- up in debt.

Gains were led by real estate stocks. An index tracking major developers rose 2.2 percent to close at a four- month high, posting its fifth straight session of gains.

Hong Kong- listed China Finance Investment Holdings plummeted 57.5 percent on Tuesday and the reason was not immediately clear. The company reported a net loss of HK$ 520.7 million ($ 67 million) in 2016.