Stocks enjoy year’s biggest weekly gain

Year of Goat ends on high note as market has best week; liquidity, eased rules given credit

Chinese equities capped the biggest weekly gain this year despite a mild correction on Friday as liquidity injection by the central bank and eased rules on foreign funds helped alleviate market anxiety over its worst yearly start.

The benchmark Shanghai Composite rebounded by 1.4 percent this week. The index fell 0.6 percent to close at 2,763.49 points on Friday, the last trading day of the Year of the Goat after a three-day winning streak.

The light turnover of 363.4 billion yuan ($55.3 billion) indicated low trading desire as investors were heading home to celebrate the Chinese New Year on Feb 8.

China’s foreign exchange regulator, the State Administration of Foreign Exchange, loosened restrictions on foreign funds on Thursday under the Qualified Foreign Institutional Investors program. They will no longer be required to apply for quotas to invest in the mainland stock market but are still subject to maximum allocation of $5 billion.

The People’s Bank of China, the central bank, injected liquidity of 330 billion yuan this week, adding to last month’s injection of 2 trillion yuan to ease the liquidity pressure as Spring Festival holidays approached, according to Bloomberg.

“The stock market rally showed that investors began to realize that the impact of the depreciation of the yuan may not be as bad as they earlier anticipated,” said Zhu Bin, an

Now any rally in the market could be an opportunity for investors to adjust their positions.”

strategist, Founder Securities Co

Guo Yanhong, analyst ties Co.

The Shanghai Composite Index has slumped 21.9 percent this year, making it the worst performer among major global indexes.

Kong Lingchao, an analyst at Guosen Securities Co, said that holiday buying, including retail, tourism and entertainment activities, should be closely followed as it is often a key factor influencing investors’ anticipation of listed companies’ performance.

Some analysts expected that a rebound of the A-share market may take place after the annual meeting of the country’s top legislature in March, since detailed policies on structural economic reform may be rolled out by the top policymakers.

“The reform may accelerate after the legislative meeting. Now any rally in the market could be an opportunity for investors to adjust their positions,” said Guo Yanhong, a strategist at Founder Securities Co.

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