Chinese markets rebound amid capital inflows, liquidity injection

Chinese stocks rebounded strongly on Tuesday from Monday's slump, with shares of over 150 listed companies surging by the maximum 10 percent.

The benchmark Shanghai Composite Index advanced 1.38 percent to 2,784.38 points, while the smaller Shenzhen Component Index increased 3.17 percent to close at 10,089.67 points. The ChiNext Composite Index, meanwhile, posted a sharp gain of 4.84 percent to 1,882.69 points, and the blue chip CSI300 index ended 2.65 percent higher at 3,785.94 points.

Total turnover on the two major bourses exploded to 910.11 billion yuan (US$130 billion), compared with 519.48 billion yuan in the previous session.

Mainland markets continued to see foreign capital pour in, with the net influx via Stock Connect schemes linking the mainland to Hong Kong reaching 4.92 billion yuan. Of this total, 4.89 billion yuan funneled into Shenzhen.

By sector, household appliance firms led the day's advance. Kongka Group Co, Changshu Tianyin Electromechanical Co and Shenzhen MTC Co all soared by the daily limit of 10 percent.

Pharmaceutical shares were also among the biggest gainers, with stocks of over 20 listed companies hitting the 10-percent daily cap.

Electric equipment firms, media shares, computer companies and the building material sector all performed strongly.

After injecting 1.2 trillion yuan into the financial system via reverse repos on Monday, China's central bank further conducted reverse repo operations in the amount of 500 billion yuan on Tuesday aiming "to ensure adequate liquidity supply and maintain reasonable and adequate liquidity in the banking system during the period of epidemic prevention and control," the People’s Bank of China said.

The current Managing Director of the International Monetary Fund Kristalina Georgieva said late on Monday that they are in favor of the measures taken by the Chinese government to deal with the current epidemic, including those in fiscal, monetary and financial aspects. 

"We are confident that the Chinese economy will continue to show great resilience," Georgieva said.