China stocks rise to fresh 7-year high on bullish state media commentary
By Samuel Shen and Pete Sweeney
SHANGHAI, April 22 (Reuters) - Chinese stocks climbed to fresh seven-year highs on Wednesday, with investors emboldened by a commentary in state media saying the bull market "has just begun", and that there was no bubble.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 2.6 percent to 4,739.81 points, while the Shanghai Composite Index gained 2.5 percent to 4,398.49 points.
The current bull run "has support from China's grand development strategy and economic reforms," and blue chip stocks are still "undervalued", said an article published on a website run by the official People's Daily newspaper.
It said the surge in share prices was a reflection of China's growth potential and denied that prices were overheated.
"It gives psychological support to the market," said Wu Kan, head of equities trading at Shanghai-based investment firm Shanshan Finance. "Obviously, regulators hope to see a steady and healthy bull market."
During the past weekend, China unveiled a crackdown on illegal margin financing, but also announced a 100 basis-point cut in banks' required reserves, adding to investors' uncertainty over over regulators' attitude toward the red-hot market, which has surged more than 80 percent since November.
The latest People's Daily article provided markets with more confidence, China-focused investment bank NSBO wrote.
Stocks in Shanghai, home to China's blue-chip companies, are trading at 21.8 times companies' earnings. That valuation is still low compared with a price/earnings ratio of 70 at the peak of China's last bull run in October, 2007. Continuación...