Investors look for govt money as Beijing bids to calm markets

martes 30 de junio de 2015 02:19 GYT

By Pete Sweeney

SHANGHAI, June 30 (Reuters) - China's efforts to stave off a crash in the world's most volatile stock market showed signs of gaining traction on Tuesday, with indexes rallying sharply on signs of intensifying government support.

Chinese equity markets have fallen more 20 percent from their peak in mid-June, when a rally fuelled by expectations of further monetary easing from the People's Bank of China (PBOC) shuddered to a halt.

On Monday main indexes dropped a stomach-churning 7 percent before a sudden reversal, while Tuesday stocks slid again in early trade before reversing course dramatically for no apparent reason.

Beijing has already enacted a suite of measures that appear targeted at stabilising sentiment in a market dominated by individual retail investors prone to mood swings, but it appears to be signs of direct government support to the market through share purchases that have finally revived the rally.

On the liquidity front, the central bank made multiple monetary easing moves last week and over the weekend, including cutting rates and reducing or eliminating banks' reserve ratios.

Regulators also said they would allow the National Social Security Fund (NSSF) to buy more stocks, which could ultimately result in more funds entering the market.

None of that appeared to have much effect, but signs of large cash inflows into Chinese ETFs, combined with rumours of other behind-the-scenes "window guidance" to institutional investors, seem to have triggered a sharp rally in the afternoon.

The CSI300 index was up 6.2 percent to 4,449.76 points at 0610 GMT, while the Shanghai Composite Index gained 5.1 percent to 4,258.30 points.   Continuación...