Chinese mainland A-share market is regaining ground on the combined strength of a steadier real economy and stronger policy support, experts said.
The comments came as Chinese mainland equities accelerated through the afternoon session on Wednesday after a subdued morning. The benchmark Shanghai Composite Index climbed 2.16 percent to 3,686.17 points, and the Shenzhen Component Index closed 4.22 percent higher at 11,335.69 points. The technology-focused ChiNext in Shenzhen surged 6.40 percent to 2,544.73 points, and the STAR 50 Index in Shanghai jumped 9.92 percent to 1,265.47 points.
Turnover across the Shanghai and Shenzhen exchanges reached 2.04 trillion yuan ($299.8 billion), up 334.3 billion yuan from the previous session and the highest since Sept 22. More than 4,600 stocks advanced and fewer than 800 declined, with over 120 shares touching the daily price increase limit.
Dong Ximiao, chief economist at Merchants Union Consumer Finance, pointed to growth of 4.6 percent in GDP over the first three quarters and an 8.5 percent year-on-year rise in third-quarter net profits of listed companies, saying earnings in hard-tech fields such as semiconductor equipment are increasingly materializing. Reforms steering longer-term capital into equities have also lifted risk appetite, he said.
The People's Bank of China said on Wednesday that it had lowered the rate on its relending facility for share buybacks and stake increases by 25 basis points to 1 percent, effective the same day, and would fully meet banks' demand for funds. Set up in October 2024, the facility channels PBOC funds to 21 nationwide lenders and five systemically important city commercial banks, which on-lend to listed companies and major shareholders.
Banks have applied for more than 200 billion yuan of quota since Monday, when the PBOC, the National Financial Regulatory Administration and the China Securities Regulatory Commission told lenders the facility would become a standing arrangement rather than a temporary one.
Jason Yu, CEO for Hong Kong and wealth lead for Asia at British asset manager Schroders, welcomed reforms to make China's capital markets more inclusive, citing the sci-tech growth tier of the STAR Market as an example of how companies with genuine innovation can gain access to public equity financing even before generating substantial profits.
Semiconductor and telecommunications equipment stocks led gains, and precious metal miners advanced after spot gold returned to $4,000 per ounce. Liquor producers, dairy companies, lenders, insurers and coal miners were among the decliners.
Wang Yubo, Zhou Lanxu and Zheng Zihang contributed to this story.
