China stocks settle near 6-1/2-month high as consumer firms rule

SHANGHAI: China‘s major stock indices closed near their 6-1/2-month highs on Monday, as sentiment was bolstered by high expectations of the US Federal Reserve taking a dovish stance at its policy meeting this week and Beijing’s policy boost for growth.

At the close, the blue-chip CSI300 index settled 2.9 per cent higher at 3,851.75 points while the Shanghai Composite Index ended up 2.5 per cent at 3,096.42 points.

At close, both indices were within sight of their highs since late May 2018.

There is much talk that Fed policymakers will lower their interest rate forecasts, or “dot plots”, to show little or no further tightening this year.

The Chinese government has additional monetary policy measures that it can take to support economic growth this year, and will even cut “its own flesh” to help finance large-scale tax cuts, Premier Li Keqiang said on Friday.

Li’s comments suggest Beijing is ready to roll out more stimulus measures to ensure the economy grows within a targeted range of 6-6.5 per cent.

“Overall, we are very optimistic about China’s stock market and continue to be bullish after the recent recovery,” Laura Wang, China equity strategist at Morgan Stanley, said at a media briefing, citing improvement in corporate earnings, Beijing’s policies to bolster growth and progress in Sino-US trade talks.

There is a 10-15 per cent potential upside for the A-share market, she said, recommending that global investors further hike their exposure to Chinese stocks.

Consumer firms led the advance on the mainland, with the CSI consumer staples index closing 6.0 per cent higher, as those companies are widely seen as beneficiary of Beijing’s measures to boost domestic consumption.

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The sub-index marked its best session since July 10, 2015.

Around the region, MSCI‘s Asia ex-Japan stock index was firmer by 0.82 per cent while Japan’s Nikkei index closed up 0.62 per cent.

At 07:06 GMT, the yuan was quoted at 6.7106 per US dollar, 0.05 per cent firmer than the previous close of 6.714.

The largest percentage gainers in the main Shanghai Composite index were Xining Special Steel Co Ltd, up 10.1 per cent, followed by Xinjiang Ba Yi Iron & Steel Co Ltd , gaining 10.09 per cent and Zhengzhou Coal Industry & Electric Power Co Ltd, up by 10.09 per cent.

The largest percentage losses in the Shanghai index were Zhonglu Co Ltd down 9.97 per cent, followed by Zhonglu Co Ltd losing 6.91 per cent and Shanghai Feilo Acoustics Co Ltd down by 6.13 per cent.

So far this year, the Shanghai stock index is up 24.2 per cent and the CSI300 has risen 27.9 per cent , while China’s H-share index listed in Hong Kong is up 14.8 per cent. Shanghai stocks have risen 5.29 per cent this month.

About 39.78 billion shares were traded on the Shanghai exchange, roughly 118.0 per cent of the market’s 30-day moving average of 33.72 billion shares a day. The volume in the previous trading session was 34.12 billion.

As of 0708 GMT, China’s A-shares were trading at a premium of 23.83 per cent over the Hong Kong-listed H-shares.



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