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China stocks rebound on government support hopes

China stocks rebound on government support hopes
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First Published: Wed, Jun 06 2007. 02 41 AM IST
Updated: Wed, Jun 06 2007. 02 41 AM IST
China’s key stock index rose 3.5%, rebounding from an earlier loss, on speculation the government would take steps to halt a rout that wiped out more than $400 billion (Rs16 trillion) of market value in less than a week.
“It is likely the government will do something to support the market,” said Xie Yan, an analyst at Haitong Securities Co. in Shanghai.
Speculation that the government would announce a market stabilization fund and rule out the introduction of a capital gains tax boosted stocks in the afternoon, Xie said.
The benchmark index fell by as much as 7.5% in Tuesday morning trade. The benchmark CSI 300 Index gained 123.20 to close at 3634.63, the biggest fluctuation among markets included in global benchmarks.
The measure, having fallen as much as 22% from a peak on 29 May, has now dropped 13% since the government tripled its tax on securities trading.
The government was trying to slow a market that’s doubled in the last six months, prompting warnings of a bubble from the central bank governor Zhou Xiaochuan as well as former US Federal Reserve chairman Alan Greenspan.
A China Securities Regulatory Commission spokesman declined to comment on Tuesday’s speculation. No one was available for comment at the finance ministry.
Datong Coal, China’s second-largest coal company by capacity, surged 2.07 yuan to 22.75, after falling as much as 7.4%. Hong Yuan Securities, China’s first publicly traded brokerage, jumped 2.86 yuan to 31.45, having dropped 6.6%.
The CSI 300 had on Monday dropped 7.7%, or 292.52, the biggest points slide on record.
“Panic selling eased, so the market rebounded,” said Mo Fan, an analyst at Soochow Asset Management Co. in Shanghai. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, gained 2.6% to 3767.10.
The Shenzhen Composite Index, which covers the smaller one, rose 2.5% to 1066.05.
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First Published: Wed, Jun 06 2007. 02 41 AM IST
More Topics: Money Matters | Global Markets |