SHANGHAI, July 6 (Reuters) - China’s key stock indexes showed signs of stabilizing on Monday, rising close to 3 percent, in response to unprecedented rescue measures announced over the weekend.
During the volatile session, money gushed into blue chips as investors used an opening spike to dump small caps.
The Shanghai Composite Index opened 7.8 percent higher, but ended the day up only 2.4 percent, at 3,775.91 points. The CSI300 index of China’s biggest companies also gave up most of its early gains, to end 2.9 percent firmer at 3,998.54 points.
The key indexes drew support from financial heavyweights , including China’s “Big Four” state lenders and state insurer China Life, and also from oil giant Sinopec.
State lenders, including Bank of China, Agricultural Bank of China and ICBC all surged by nearly an one-day limit of 10 percent.
Market supportive measures unveiled over the weekend included a collective pledge by China’s top brokerages and fund managers to invest at least 120 billion yuan ($19.33 billion) into stocks, and state investor Central Huijin’s promise to buy more exchange-traded funds (ETFs).
After opening over 6 percent higher, China’s growth board ChiNext trended lower and closed down 4.5 percent, as investors unwound positions in the tech-focused board.
Hong Hao, chief strategist of BOCOM International, said it’s still too early to judge whether government emergency measures announced over the weekend would work to stabilize the market.
“Whether the blue chips will calm the small caps, or the small caps will continue to unsettle the rest of the market remains to be seen,” Hong wrote on Monday. (Reporting by Samuel Shen and Pete Sweeney; Editing by Richard Borsuk)