Investors breathe a sigh of relief as mainland China, Hong Kong stocks swing to higher close
Top officer at Public Security Bureau warns of crackdown against 'malicious short selling' as stocks in HK and on the mainland bounce back
Hong Kong and mainland stocks ended another volatile session higher yesterday, but the gains risk overstating what analysts said were tentative bounces from some of the sharpest falls since the global financial crisis.
The relief rally came as Liu He, a top economic adviser to President Xi Jinping , told reporters on the sidelines of the BRICS summit in Russia that neither the Chinese economy nor its stock market were in bad shape.
Trading volume in Hong Kong was almost evenly split between buyers and sellers of the city's 50 benchmark stocks, despite every sector in the index posting what appeared to be solid recoveries.
Half of all mainland stocks remained suspended, leaving investors with few options but to buy back what they had sold in a bid to balance their exposures.
The Shanghai Composite Index rose 5.76 per cent, or 202.14 points, to 3,709.33, the biggest single-day rise in percentage terms since March 4, 2009, when the index added 6.12 per cent.
Nearly 1,300 of the 1,400 stocks available for trading on the mainland surged by their daily 10 per cent limit, led by brokers, coal miners and construction-related companies.
The Shenzhen Component Index rose for the first time in seven days, rising 4.25 per cent to 11,510.34 points.
Hong Kong's Hang Seng Index jumped 3.73 per cent, or 876.23 points, to 24,392.79. The H-share index rose 3.05 per cent, or 339.07 points, to 11,446.37.
Watch: Global stocks find support as China rebounds
Investors on the mainland started to feel the effect of the flurry of unconventional market-boosting measures from policymakers.
Among the new measures, the securities regulator yesterday said it would provide capital to mutual funds to improve market liquidity to help offset redemption pressures.
The China Securities Regulatory Commission said it would allow financial institutions to renegotiate maturity terms with their clients and allow banks to ease margin requirements for borrowers.
Meanwhile, the mainland's deputy public security chief visited the CSRC offices with his team to investigate what they called "malicious short selling", Xinhua reported.
Liu Dong, a deputy director from the economic crimes investigation bureau under the Ministry of Public Security, told state television the ministry would work with the securities regulator to go after illegal activities related to securities and crack down on rumour-mongers.
Another measure, to ban major shareholders from selling stakes in listed companies for six months, drew criticism from international fund managers.
While Templeton called it an act of "desperation", Wells Fargo said it just "postpones the inevitable", Bloomberg reported.
The government might have more room for policy boosts. The central bank was under pressure to cut another 50 basis points in banks' reserve requirement ratios as inflation remained low and manufacturing was sluggish, ANZ Bank said.
The mainland's consumer price index rose 1.4 per cent last month from a year earlier, while the producer price index fell 4.8 per cent, data showed yesterday.
