November 19, 2019 / 7:43 AM / 18 days ago

China stocks rise most in two weeks on fresh stimulus hopes

SHANGHAI, Nov 19 (Reuters) - China stocks rose the most in two weeks on Tuesday, as a cut in a key interbank funding rate on Monday bolstered hopes for more government stimulus to prop up slowing growth. ** The blue-chip CSI300 index rose 1.0%, to 3,947.04, while the Shanghai Composite Index gained 0.9%, to 2,933.99.

** The People’s Bank of China unexpectedly trimmed a closely watched money market funding rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.

** The seven-day reverse repurchase rate was cut to 2.50% from 2.55%.

** Ting Lu, chief China economist at Nomura International, said he expected a couple of small, 5-basis-point cuts in money market funding rates before mid-2020.

** “It’s now very evident that Beijing has been stepping up efforts to stabilize growth as top leaders are increasingly concerned about the downward pressure on growth,” Lu wrote.

** “I believe Beijing is to plan a bigger fiscal deficit and bigger amount of special bonds in 2020. Beijing might especially wish to boost infrastructure investment growth.”

** Investors are awaiting clearer news on the progress of U.S.-China trade negotiations. Overnight, CNBC reported the mood in Beijing was pessimistic about the prospects of sealing an agreement. On the other hand, a new extension allowing U.S. companies to keep doing business with Chinese telecoms giant Huawei suggested something of an olive branch.

** The CSI300 financial sector sub-index was higher by 0.34%, the consumer staples sector up 0.92%, the real estate index up 1.65% and the healthcare sub-index up 2.1%.

** The smaller Shenzhen index ended up 1.83% and the start-up board ChiNext Composite index was higher by 2.77%.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.51%, while Japan’s Nikkei index closed down 0.53%.

** At 07:15 GMT, the yuan was quoted at 7.0248 per U.S. dollar, 0.01% firmer than the previous close of 7.0255.

** The largest percentage gainers in the main Shanghai Composite index were Jiangsu Zongyi Co Ltd, up 10.08%, followed by Jiangsu Lugang Culture Co Ltd, gaining 10.07%, and Panda Financial Holding Corp Ltd, up by 10.05%.

** The largest percentage losers in the Shanghai index were Zhejiang Shengda Bio-Pharm Co Ltd, down 7.14%, followed by Ribo Fashion Group Co Ltd, losing 4.94%, and Jiangxi Lianchuang Opto Electronic Science &Technology Co Ltd, down by 4.26%. (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)

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