China’s Stocks Head for Biggest Weekly Gain in Two Months

China stocksAn investor observes electronic board at a stock exchange hall on July 7, 2015 in Shenyang, Liaoning Province of China. Photographer: ChinaFotoPress via Getty Images

China’s stocks headed for the steepest weekly gain in two months after the government signaled increased support for the economy through higher spending and new measures to boost bank lending.

The Shanghai Composite Index slipped less than 0.1 percent to 2,862.25 at 10:39 a.m., paring this week’s advance to 3.4 percent. Banks led declines on Friday, while technology shares extended gains for the best performance among industry groups this week. Hong Kong’s Hang Seng China Enterprises Index fell 0.6 percent, trimming the five-day rally to 8.1 percent.

Policy makers have accelerated measures to bolster the economy after data this week showed a decline in exports and a pickup in inflation. In moves that could support lending after a record surge in new yuan loans last month, the People’s Bank of China loosened restrictions on what banks could pay on deposits and charge for loans, while the nation’s cabinet has discussed lowering the minimum ratio of provisions that banks must set aside for bad loans. Even with this week’s advance, the Shanghai gauge is the world’s worst performer this year after Greek and Italian equities, plunging 20 percent.

 “The rebound has policy support and the Shanghai Composite may rise further to 3,000,” said Li Jingyuan, general manager at Shanghai Bingsheng Asset Management. “All the policies to support growth are good and helpful to recover the market confidence. It’s hard to say whether the economy will pick up any time soon, but it cannot get worse.”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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