China Market ekes out gains after rout

Mainland China equity market finished session modest higher on Tuesday, 04 February 2020, as investors chased for bottom fishing following a plunge the day before on concerns over the coronavirus outbreak. Adding to buying was Chinese central bank's massive liquidity injection to stabilize the economy. At closing bell, the benchmark Shanghai Composite Index added 1.34%, or 36.68 points, to 2,783.29. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.8%, or 29.02 points, to 1,638.02. The blue-chip CSI300 index was up 2.64%, or 97.28 points, to 3,785.64.

Investors appear to be taking some comfort from the measures Beijing is introducing to support economic growth, even as travel restrictions continue in China and business shut-downs mount.

Chinese stocks tanked on Monday a $720 billion plunge that was biggest since the country's bubble burst in 2015.

Moody's Investor Services says China's economy may not grow as much as expected this year and will likely need more stimulus to counteract the impact of the coronavirus on consumer spending. citing China's economy is much more reliant on consumer spending now compared to when the SARS virus hit in 2003. Moody's had been expecting China's GDP to grow by 5.8 per cent this year. It has an A1 stable rating on China's debt.

Two-thirds of the Chinese economy will remain closed this week as several provinces took the extraordinary step of extending the Lunar New Year holiday to help curb the spread of the disease that's claimed more than 420 lives, with confirmed cases topping 20,000.

CURRENCY NEWS: The People's Bank of China (PBOC) set its daily yuan fixing stronger than the key 7 per dollar level on Tuesday in a signal of support even as the currency weakened past the key level on Monday. The People's Bank of China set the daily reference rate at 6.9779 per dollar.

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