Mainland China stocks bounced back moderately on Monday, ending the Shanghai Composite index’s three-week losing streak, after 21 Chinese brokerages over the weekend pledged billions of dollars to form a 120 billion yuan (HK$150 billion) stock rescue fund.
The massive fund, designated to stabilise the sagging stock markets, was followed up the next day by the People’s Bank of China’s decision to provide liquidity to China Securities Finance Corp, the only institution that offers margin lending to brokerages.
The two moves are among a flurry of market-boosting measures, including a halt on initial public offerings, initiated in the past days to revive the market.
The Shanghai Composite Index jumped 7.8 per cent at open, before finishing the day up 2.41 per cent, or 89 points, to 3,775.91. Apart from a short-lived decline in the afternoon session, the recovery was led by gains of large-cap banks and oil majors. Each of these sectors posted an 8 per cent increase.
Turnover in Shanghai jumped to 943.4 billion yuan on Monday from 643.5 billion yuan on Friday.
The People’s Daily said the markets would stabilise. “Rainbows always appear after rains,” as it put it.
Large state-owned banks were among the big winners of the day, with some of them gaining more than 8 to 9 per cent, relatively unusual due to their very large market cap
