The Shanghai Composite Index rose over 3%. Photo: AP
The Shanghai Composite Index rose over 3%. Photo: AP

China stocks jump 3% as state steps up support

China has released its widely-expected plan to cut personal income taxes after data showed the nation’s economy grew at the slowest pace since 2009.

Hong Kong: Chinese stocks jumped the most in more two years after top officials continued to express support for the nation’s struggling private sector. The Shanghai Composite Index rose 3.1 percent to 2,629.90 as of 10:11 a.m. local time, the biggest advance since May 2016 and extending Friday’s gain. Over the weekend, President Xi Jinping vowed “unwavering" support for non-state firms, while the country’s stock exchanges committed to help manage share-pledge risks. China also released its widely-expected plan to cut personal income taxes after data showed the nation’s economy grew at the slowest pace since 2009.

Chinese stocks had rallied on Friday following a rare coordinated effort from top financial officials to support the equity market, after margin calls and forced selling accelerated this year’s downward spiral. The nation’s share market has still lost more than $3 trillion in value since January, amid concern a liquidity crunch and the U.S. trade dispute would hurt economic growth. The Shanghai Composite is the world’s worst performing global benchmark in 2018, falling below 2,500 points last week for the first time in almost four years.

“There is some sincerity in the tax deduction policies and the news on relief funds over the weekend," said He Qi, fund manager at Huatai Pinebridge Fund Management Co. in Shanghai. The policies “may serve the purpose of providing a golden window of opportunity for a rebound before the end of the month."

Shares of securities firms, which are among the biggest lenders to private firms trading on the mainland, surged onshore and in Hong Kong. Moves by authorities to reduce stock-pledge risks should stabilize the equity market and help lift valuations for Chinese brokers, according to Goldman Sachs Group Inc. Shares of Orient Securities Co., Citic Securities Co. and Huatai Securities Co. rose at least 8 percent.

The yuan fell 0.1 percent to 6.9423 per dollar. U.S. Treasury Secretary Steven Mnuchin said he’s open to changing how the U.S. determines which nations are gaming their currencies, after refraining to labeling China a currency manipulator in a semi-annual report last week.

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