China Market surges on regulators signal support

The China share market finished session sharp higher on Monday, 20 July 2020, as risk sentiments underpinned after reports that China's regulators raised the limit for insurers to invest in equity assets to 45% in an effort to bring more long-term funds into the market. Also supporting the market was central bank decision to keep both its one-year and five-year loan prime rate unchanged for the third straight month as its economy continued to recover after reopening following the coronavirus crisis.

At closing bell, the benchmark Shanghai Composite Index surged 3.11%, or 100.02 points, to 3,314.15. The Shenzhen Composite Index, which tracks stocks on China's second exchange, spurted 2.68%, or 57.77 points, to 2,216.70. The blue-chip CSI300 index gained 2.98%, or 135.60 points, to 4,680.30.

China's banking and insurance regulator said it was raising the cap on how much the country's insurers can invest in equity assets, an effort trying to bring more long-term funds into the capital market. The raising of equity investment cap for insurers will have an evident positive impact for the short term by bringing fresh money into the stock market.

CURRENCY NEWS: The yuan edged down against the dollar on Monday, after swinging in a tight range around the critical 7 per dollar level, despite firmer mid-point fixing by central bank as ongoing Sino-U.S. tensions pressured sentiment. Prior to market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 6.9928 per dollar, 115 pips or 0.16% firmer than the previous fix of 7.0043.

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