Stocks close higher; technology leads gains

Chinese mainland stocks extended their gains on Tuesday, led by technology, consumer and financial stocks, as risk appetite improved on signs the government will relax monetary and fiscal policies to counter the impact of China-US trade frictions.

Investors also drew solace from a media report that China’s major insurers have invested billions of Chinese yuan in the stock markets in the past three trading days in bargain hunting activities.

The blue-chip CSI300 index ended 1.82 percent higher at 3,326.65 points, while the Shanghai Composite Index closed up 1.31 percent at 2,733.83 points.

“It’s clear the government is relaxing policies. There’s ample liquidity... and China is stepping up infrastructure investment,” said Gao Ting, head of China Strategy, UBS Securities. He expects the rebound to last for a few months, but warned the market could resume its fall if ChinaUS trade frictions escalate further.

China is likely to cut banks’ risk weighting for local government bonds from 20 percent to zero in the near term to attract funding for the bonds, the China Securities Journal reported on Tuesday. The move, if confirmed, would make it easier for local governments to raise money for infrastructure investment.

The CSI300 financial sector sub-index closed 1.2 percent higher, the consumer staples sector ended 3.98 percent firmer, the real estate index closed up 1.39 percent and the healthcare subindex ended 4.36 percent higher.