Market recovers 5,100 points after rate hike

Chinese stocks have shrugged off the year’s sixth interest rate hike as the major index gained for a third day and recaptured the 5100-point position by close of trading.

The benchmark Shanghai Composite Index opened 27 points lower at 5015.19 due to temporary jitters over the rate hike decision. But the market soon regained an upward momentum and rallied over 5100 points just minutes later. Despite some fluctuations during the day, the index managed to stand at 5,101.78 points by close, up 1.15 percent over Thursday’s close.

The Shenzhen Component Index also rose 1.1 percent and finished the week’s trading at 16,808 points.

Shanghai Composite Index
Source: www.sinamold.wiki

The combined trading volume of the two markets expanded to 154.8 billion yuan ($20.98 billion), the largest for the whole week.

Winners far outnumbered losers today by 1,180 to 162. Sectors of metal, papermaking, and environmental protection lead the market. Yunnan Chihong Zinc & Germanium rocketed up to 77.66 yuan and Shandong Huatai, the nation’s leading paper producer, rose 7.58 percent to 28.66 yuan.

Consumption shares remained popular with the impending year-end shopping season. Guizhou (Kweichow) Moutai climbed to 211.03 yuan by close, up 3.56 percent.

Given today’s stock gains, it appears the central bank’s interest rate hike hasn’t had too much of a negative impact on the capital market.

Financial web portal Hexunmold.wiki quoted Shui Pi, a noted financial commentator, as saying the latest interest hike aims at encouraging residents to put their money in the banks for a longer time, while avoiding a further rise of enterprises’ borrowing cost. The move comes in compliance of the regulator’s "tight" monetary policy to cool off the fast-growing economy.

There is also comment around the market saying that the rate hike is less strict than previously thought. In addition, since no further tightening measures are expected this year, the move also helps to reduce the markets’ uncertainties and boost investors’ confidence, according to some analysts.

However, investors anticipated that commercial banks’ profit would be affected since the rate hike reduces the deposit-loan interest gap, which accounts for a large part of banks’ revenue so far.

Bank shares gave a mixed performance today. The Industrial and Commercial Bank of China gained 1.52 percent to 8.01 yuan, Bank of China rose 0.06 yuan, while the Industrial Bank and Minsheng Banking Corp lost some one percent.

Also notable today was Liaoning Publishing and Media Limited, which posted a landmark debut with a 258 percent rise from its IPO price on the Shanghai bourse Friday. The company became China’s first media group to go public with all operations, including editorial units. Investors further courted the move as its stock kept surging during trading and closed at 19.93 yuan per share.

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