China blue-chips leap
most in nine months, some sense state support
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[May 25, 2017]
(Reuters) - China stocks rose sharply on Thursday, as the blue-chip
CSI300 index posted its best day in more than nine months despite the
surprise decision by Moody's to downgrade the country's sovereign credit
rating a day earlier.
Traders cited growing hopes that global index provider MSCI Inc would
add mainland Chinese shares to its benchmark next month, and some also
hinted that state-directed buying might have helped prop up the market.
One stock analyst at a Chinese securities company said there was
"national will" on Thursday for the market to go up.
The blue-chip CSI300 index rose 1.8 percent, its biggest gain
since Aug. 15, and ended at 3,485.66 points, its highest close in more
than a month.
The Shanghai Composite Index advanced 1.4 percent to 3,107.83 points.
Chinese stocks also rose a touch on Wednesday after Moody's clipped
China's credit rating by one notch, prompting official criticism.
The strongest performers in China's markets on Thursday were banking and
real estate stocks, whose indexes jumped 3.3 percent and 4.0 percent,
The SSE 50 - dubbed China's "Nifty Fifty" index - leaped 2.7 percent to
close at a near 17-month high.
Meanwhile, China's Nasdaq-style board ChiNext <.CHINEXTP> inched up 0.1
percent, reversing earlier losses to follow the broader market higher.
State intervention in financial markets is not unheard of in China.
During the market rout of mid-2015, a band of government-backed
investors, dubbed the "National Team", was ordered to try to stop the
bleeding by buying stocks.
There was some speculation online that the National Team was at it again
in the wake of the downgrade.
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An investor looks at an electronic board showing stock information
at a brokerage house in Nanjing, China May 24, 2017.
Stirring memories of the government-orchestrated campaign in 2015 to prop up
stocks, 20 companies said late on Wednesday that their major shareholders
planned to increase their holdings, the state-owned newspaper Securities Times
foreign exchange market on Thursday, traders said they saw major state-owned
banks selling dollars, which helped push the yuan to a near-two month high
against the dollar.
Expectations were building that MSCI will announce China's inclusion in its
Emerging Markets Index when it issues its annual classification review on June
Snubbing China last year, MSCI cited concerns over share suspension rules and
monthly limits on repatriating capital.
China Securities Co., a brokerage, said in a report on Wednesday: "The chance of
an A-share inclusion into MSCI has risen drastically for 2017."
The brokerage encouraged continued buying of leading blue-chips, which have
already outperformed small-caps this year.
JP Morgan, China International Capital Corp and BlackRock have also expressed
optimism over prospects that A shares could be included by MSCI this year.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Richard Borsuk)
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