Banks lead China stocks higher on financial deregulation
November 13, 2017 | 11:59 AM
by Reuters

Shanghai: China stocks rose on Monday morning, led by banks, as excitement over financial deregulation unveiled last week continued to boost sentiment, mitigating wider concerns about higher corporate borrowing costs amid rising bond yields.

The blue-chip CSI300 index rose 0.4 per cent, to 4,128.82 points at the end of the morning session, while the Shanghai Composite Index gained 0.3 per cent, to 3,442.99 points. Investors piled into financial stocks, betting Beijing's move to widen foreign access to its giant financial sector would attract fresh foreign capital inflows, and push up the valuations of Chinese lenders, insurers and brokerages.

The latest changes, announced by vice finance minister Zhu Guangyao on Friday, include raising the limit on foreign ownership in joint-venture firms involved in the futures, securities and funds markets to 51 per cent from the current 49 per cent. Meanwhile, China will drop the foreign ownership cap on banks."The relaxation of existing curbs will ease restrictions on investment inflows to China," wrote Raymond Yeung, ANZ's chief economist of Greater China.

"Given the fast expansion in financial assets over the past few years, we believe that there will be a slew of optimistic headlines carrying positive emphasis on their value. "Banking shares jumped, with an index tracking the sector rising 1.7 per cent. Small- and mid-sized commercial banks, including Jiangsu Wujiang Rural Commercial Bank , Ping An Bank Co Ltd and Wuxi Rural Commercial Bank Co were among the biggest gainers.

The strength in banking stocks counteracted wider fears stirred by rising bond yields with China's benchmark 10-year treasury yield up at it the highest level in three years.

Hong Kong stocks were more subdued, reflecting cautious trade in Asia as investors look to see whether U.S. Republicans can hammer a tax reform deal quickly.

The Hang Seng index added 0.3 per cent, to 29,198.26 points, while the Hong Kong China Enterprises Index lost 0.3 per cent, to 11,711.45.

The top gainers among H-shares were China Minsheng Banking Corp Ltd up 2.41 per cent, followed by Zhuzhou CRRC Times Electric Co Ltd gaining 2.13 per cent and China Shenhua Energy Co Ltd up by 1.95 per cent.

The three biggest H-shares percentage decliners were Great Wall Motor Co Ltd, which fell 2.81 per cent, Sinopharm Group Co Ltd, down 1.8 per cent and China Life Insurance Co Ltd, which declined 1.8 per cent.

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