Chinese stocks climb on economic outlook
On Tuesday, Chinese financial and property names were the biggest beneficiaries of the stock market after policy makers signaled their determination to shore up the economy.
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Some investors fretted that the economic situation may be softer than anticipated, as they saw gains in companies from heavy machinery manufacturers to appliance manufacturers.
The CSI Financials Index went up by 1.3% after the announcement Monday of a cut to the reserve requirement ratio. A gauge of Shanghai-listed developers rallied 2.8%, while its Hong Kong counterpart rose 2.1% after the Politburo of the Communist Party signaled an easing of restrictions on the real estate industry.
The benchmark CSI 300 Index was up just 0.5% at the end of the morning session, compared to a gain of 1.1% in the MSCI Asia Pacific Index.
The RRR cut came right at the heels of the premier s mention, and the speediness may cause people to worry that the economy could be worse than expected, said Peng Linxia, associate investment officer at Golden Glede Fund Management Zhuhai Hengqin Co. On Monday, a sovereign bond price was largely priced in the RRR news when 10 year government bond yields dropped five basis points to 2.82%. They were around 2.85% early on Tuesday.
The offshore yuan was little changed compared to the dollar. Credit traders said that Chinese high-yield dollar bonds rose as much as 2 cents on the dollar Tuesday morning on the easing signs.
Market watchers said that China will need to reduce the banks reserve ratio to boost risk assets, given the move of fine-tuning monetary policy that has already been priced in by the domestic financial markets.
According to Zhiwei Zhang, Chief Economist at Pinpoint Asset Management, believes that the government is willing to change its policy stance in the property sector, how much will be changed and whether a change in stance can really help to turn the sector around.
Construction supplies maker Beijing Oriental Yuhong Waterproof Technology Co. increased by as much as 10% while the company's construction supplies went up 8.3%.
A gauge of mainland-listed brokerages, which are typically the most sensitive to the looser monetary stance and the most volatile pocket of the market in times of exuberance, advanced, led by Industrial Securities Co. None The Fall of a Russian Cyberexecutive Who Went Against the Kremlin