China stocks rise as firms urge workers to buy shares

Business Wednesday 07/June/2017 12:23 PM
By: Times News Service
China stocks rise as firms urge workers to buy shares

Shanghai: China stocks advanced on Wednesday, led by the blue-chip CSI300 index closing at a six-month high, as a growing number of listed firms encouraged employees to buy shares, and as the central bank moved to ease fears of a mid-year liquidity crunch.
The blue-chip CSI300 index rose 1.2 per cent, to 3,533.87 points, while the Shanghai Composite Index also advanced 1.2 per cent to 3,140.32 points.
Hopes that MSCI will include China's A shares in its indexes later this month also whetted investors' appetite for big-cap stocks, with more investment banks predicting a good chance of such a move.
Over the past week, controlling shareholders of over a dozen listed companies have called on employees to buy the companies' shares, while promising to absorb any losses incurred if they hold the shares for at least 12 months.
Shares in those companies have jumped in response, and the optimism appears to be spreading as investors bet more companies would issue similar statements.
Markets watchers said it was not clear if the calls to buy shares were linked to broader efforts by authorities to stabilise money and currency markets in recent weeks.
But investors drew some solace from signs that the central bank is moving to ease worries of liquidity stress later this month as banks brace the central bank's quarterly health check.
On Wednesday, the People's Bank of China injected 180 billion yuan ($26.49 billion) into the interbank market via open market operations, after providing capital support via one-year Medium-term Lending Facility (MLF) loans in the previous session.
In addition, an increasing number of institutions are now betting China's A shares will be included in the MSCI's benchmark index. That decision will be made on June 20.
"MSCI inclusion is now a real likelihood," asset manager Robeco said in a report this week.
"We think this time there is a real chance of success. With the improving fundamentals and attractive valuation, we are positive on the market outlook."
Stocks rose across the board, with consumer and material stocks leading the rise.