China Stocks rise as Beijing signals more economic support

The Mainland China share market finished session higher on Thursday, 18 June 2020, as buying sentiments underpinned by central bank pledges for more reforms and liquidity to bolster capital markets. Further boosting sentiments was Vice Premier Liu He statment that China should make monetary policy more flexible, keep liquidity reasonably ample and that the world's second-largest economy was improving. .

At closing bell, the benchmark Shanghai Composite Index added 0.12%, or 3.44 points, to 2,939.32. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.24%, or 4.56 points, to 1,908.33. The blue-chip CSI300 index rose 0.67%, or 26.79 points, to 4,044.38.

Investors were in a risk-on mood from the get-go, as the central bank governor said on Thursday that China's economic fundamentals remain sound and its financial markets are stable overall, adding that the bank would keep liquidity levels reasonably ample in the second half of the year. New loans are likely to hit nearly 20 trillion yuan ($2.83 trillion) this year, up from a record 16.81 trillion yuan in 2019, and total social financing could increase by more than 30 trillion yuan, the governor said.

Further boosting sentiments was China's top securities regulator statement on Thursday that the country would continue to comprehensively deepen capital market reform, and that the top priority is to help market confidence recover amid the pandemic. The remark came after Beijing finalized over the weekend new IPO rules for Shenzhen's ChiNext startup board, as it pushed forward with reforms in its capital markets.

However, market gains were somewhat capped amid fears of a second potential wave of novel coronavirus infections after rises in the numbers of coronavirus patients in Beijing. China reported 28 fresh COVID-19 cases in the mainland as of end-June 17, 21 of which were in the capital of Beijing, the country's health commission said on Thursday.

CURRENCY NEWS: The yuan firmed against the dollar on Thursday, despite soft mid-point fixing by central bank. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0903 per dollar, 0.04% weaker than the previous fix of 7.0873. The onshore yuan CNY=CFXS strengthened 0.1% to 7.0764 per dollar and the offshore yuan CNH=D3 firmed 0.09%.

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