Stocks rise in Shanghai, Shenzhen
Property, banking, chemical firms post strong gains on major bourses
Equities rose by more than 1 percent on Tuesday in Shanghai and Shenzhen with strong gains seen in real estate, banking and chemical firms, marking a strong beginning on the first trading day of 2018.
The benchmark Shanghai Composite Index gained 1.24 percent to 3,348.33 points while the Shenzhen Component Index rose 1.25 percent to 11,178.05 points. The blue-chip CSI 300 Index rose 1.41 percent, driven by the financial sector sub-index and real estate sub-index.
Chemical company Shandong Lubei Chemical Co Ltd and real estate developer Gemdale Group Co Ltd were among the top gainers, rising nearly 10 percent, the maximum permissible limit for a single trading day.
Cement supplier Fujian Cement Co Ltd and fiberglass supplier China Jushi Co Ltd also gained 10 percent to lead growth in the industrial resources sector.
CICC, one of China’s largest brokerages, said that it expects 2018 to be a period of continuous recovery in the stock market, with the A-share market likely to post double-digit growth this year.
“Growth in China … recovered more than expected in 2017, and is going to continue to recover in 2018. Yields in 2018 are expected to be better than that of 2017,” the research note said.
In 2017, some 64 percent of 133 million individual investors in the A-share market experienced losses and only 36 percent of the investors gained from the market, according to data from Royal Flush, an investment data and information services provider.
In 2018, leading players are likely to lead the rally in the market, said a research note from CITIC Securities. “As China’s economic growth is starting to stabilize in a healthy and quality-oriented manner, leaders in various industries are presenting opportunities for value investment for both small, individual investors and global institutional investors. The A-share market is likely to experience a bullish 2018 driven by market leaders,” the note said.
On Dec 29, 2017, the People’s Bank of China, the central bank, introduced a contingent reserve requirement ratio (RRR) cut for large and nationwide mid-cap banks, which may see the most cash withdrawals during the Chinese Lunar New Year holidays between Feb 15 and Feb 21.
The cut allows those banks to withdraw up to 2 percent RRR for 30 days, or up to 1.5 trillion yuan ($230.96 billion), according to data from Nomura.
Mid-cap lenders gained more than 1 percent on Monday. Shanghai-listed urban commercial lender Bank of Ningbo gained by 4 percent, while Shenzhen-listed Bank of Ping An gained 3 percent.