Mainland stocks up on liquidity situation

Chinese mainland stocks ended last week higher, bolstered by strong gains in financial shares on Friday, amid rising expectations of an improved liquidity situation in the country.

The Shanghai Composite Index gained 2.05 percent, erasing last week’s losses to end the past five trading sessions 2.62 percent higher.

Meanwhile, the blue-chip CSI300 index rose 2.52 percent over the past week.

Investors started piling into financial sectors after Chinese authorities suggested new asset management rules. Early on Friday, the China Banking and Insurance Regulatory Commission released draft rules on commercial banks’ wealth management products (WMPs).

Following the news, a sub-index tracking the blue-chip CSI300 financial sector jumped 3.79 percent.

Banking and insurance shares saw strong performances, with New China Life Insurance, for instance, rising 9.31 percent and China Merchants Bank gaining 6.87 percent.

On the Shanghai bourse, 1,136 shares posted gains, outnumbering 209 shares that had posted losses on Friday.

Also on Friday, the People’s Bank of China, the country’s central bank, issued guidelines allowing publicly raised asset management products to invest in non-standard debt assets in accordance with regulations on quota limits and disclosures.

Those new rules on asset management could indicate that there will be more liquidity in the market, which is likely to shore up bullishness in the stock market, securities analysts said. Given such positive signs, the rally is expected to last through this week.

According to experts, military shares are expected to rise in the following days, given their robust earnings forecast amid the central government’s efforts to deepen reform in the sector. About 80 percent of listed military enterprises forecast gains for their half-year financial reports.