Shanghai stocks rise after PBOC shores up liquidity

Shanghai stocks posted strong gains on the opening trading day of the week yesterday following China’s central bank move late Friday to boost liquidity.

The benchmark Shanghai Composite Index gained 0.72 percent to 2,533 points with turnover at 145.5 billion yuan (US$21.3 billion).

The People’s Bank of China on Friday cut the reserve requirement ratio — the amount of cash banks have to hold in reserve to cover liabilities — by 1 percentage point to stimulate the economy amid concerns of a slowdown.

It was the fifth cut in a year and added US$116 billion to the economy.

Minsheng Bank chief researcher Wen Bin expects further cuts of the reserve ratio in the coming year to maintain liquidity.

Railway equipment makers led the gains. Guangdong Huatie Tongda High-speed Railway Equipment Corporation jumped 6.9 percent. Zhuzhou Feilu High-tech Materials Co surged the daily limit of 10 percent.

Telecommunications and 5G chip makers were among the stronger performers amid expectations the next generation mobile network and commercial applications would boost their performance.

Financial shares were under pressure.

The Bank of Communications lost 0.51 percent and Bank of China dipped 0.28 percent to 3.57 yuan. China Life Insurance sank 1.27 percent.