Shares rise to 1-month high on stimulus hope

Blue chips on the Chinese mainland rose to a one-month high as the State cabinet vowed to pursue a more “vigorous” fiscal policy in a fresh sign that authorities are set to further loosen monetary conditions to support growth.

The Shanghai Composite Index closed 1.61 percent higher at 2,905.56 points, returning back to the psychologically key 2,900 point level.

Meanwhile, the blue-chip CSI300 index gained 1.7 percent, hitting a one-month high, before ending 1.59 percent higher at 3,581.71 points.

Infrastructure construction shares led the gains, with a sub-index tracking the sector rising 6.90 percent. Cement firms were also among the best performers, with Tangshan Jidong Cement Co, for instance, up 9.98 percent.

Some investors say that fears of a rout in Chinese markets are overdone.

On top of the policy easing, analysts also cited new rules governing financial institutions’ wealth management and asset management businesses for the jump in shares, noting they are less stringent than expected.

For example, the new regulations would allow publicly issued products to invest in non-standard debt products, and would lower the investment threshold for investors.

“The new rules would have a comprehensive and profound impact on China’s financial system, and would help reduce systemic risks” due to economic slowdown and financial deleveraging, Albert Xu, a strategist at brokerage Zhongtai International, wrote in a note.