China Shares Ride A Roller Coaster

By Glenn Dyer | More Articles by Glenn Dyer

So has the Chinese market calmed down and taken a deep breath after the second day in a row of strong gains?

Chinese stocks had their biggest one-day gain in almost three years on Monday, continuing Friday’s dramatic rebound after the government made a concerted move last week to reassure investors and buoy markets following a steep sell-off.

The CSI 300 index of companies listed on the Shanghai and Shenzhen stock exchanges closed up 4.3%, its largest one-day gain since November 2015.

Shares in mainland Chinese companies listed in Hong Kong also climbed, with the Hang Seng China Enterprises Index of Chinese companies listed in the city jumping 2.6%, its best day since March.

The benchmark Hang Seng index rose 2.3%.

Investors unnerved by the escalating Trump-China trade war have sold off Chinese stocks in the past month or so, sending the CSI 300 on its steepest monthly drop since January 2016.

The sharp rebound over the past two trading sessions came only after an extraordinary effort on Friday to bolster sentiment by Vice-Premier Liu He, President Xi Jinping’s top economic adviser, and trade negotiator, as well as the heads of China’s central bank, banking regulator and securities watchdog.

In his comments last week, Mr. Liu dismissed fears about the economic impact of the escalating US trade war, saying “the psychological impact is greater than the actual impact”.

China reported third-quarter GDP rose at an annual rate of 6.5%, lower than the 6.6% forecast and 6.7% in the second quarter.

It was China’s weakest quarterly growth figure since the depths of the 2008-09 GFC but because of the stronger growth in the first half, the government remains on track to exceed its full-year growth target of 6.5% in 2018.

The Shanghai Composite jumped 2.6% for its strongest day since August 7, while the Shenzhen Composite also ended up 2.6%, representing its best session since August 9.

Both indexes were down solidly to start Friday’s session but rebounded strongly as news of the statements from the various officials and the government spread.

But as strong as Friday’s gains were the Shanghai market lost 2.2%, falling for a second week in a row. Now its up another day and Tuesday?

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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