China stocks narrow losses on back of central bank's favorable policies

The A-share market narrowed losses on Thursday, thanks to the central bank’s overnight announcement to boost inclusive finance, although the Shenzhen Component Index hit a new low since May 2014 during the afternoon trading session.

The benchmark Shanghai composite showed signs of rebounding and closed the day down by 0.04 percent, or 0.93 points, to stand at 2,464.36, lifted by the strong gains of military manufactures.

The tech-heavy Shenzhen Component Index fell by 0.84 percent to end at around 7,089.44 points, after it hit a four-year new low during the afternoon trading session. The Nasdaq-style ChiNext enterprise board shed 1.16 percent to finish at 1,214.50 percent.

Leisure companies, communications stocks as well as food and beverages names led the losses. Super Telecom, a Guangdong-based communication network service provider, saw its shares plunge by the daily limit of 10 percent to close at 32.40 yuan (US$4.71) per share.

The People’s Bank of China announced on Wednesday night that from 2019, it will adopt a new set of criteria for assessing banks’ loans to small and micro-enterprises, which stipulates that the credit lines to smaller companies will be relaxed to less than 10 million yuan from the previous standard of less than five million yuan.

Analysts say the move will be conducive to better implementation of the country’s targeted reserve requirement ratio reduction policies. China International Capital Corporation Limited (CICC) said in its research note that the adjustment will help expand the coverage of targeted loans for inclusive finance and signals further liquidity easing will be on the way.