Shanghai shares rise above 3,000-point mark

Tracy Li
Benchmark index continued its rally as investors chased market heavyweights though stocks were mixed on Wednesday as the second half of the year got underway. 
Tracy Li

Chinese stocks finished mixed Wednesday as the second half of the year got underway.

The benchmark Shanghai Composite Index continued its rally and at close it was up 1.38 percent at 3,025.98 points as investors chased market heavyweights.

The smaller Shenzhen Component Index gained 1.01 percent to finish at around 12,112.96, while the ChiNext Index wiped out previous gains and slipped 0.76 percent to end the day at 2,419.63.

Trading volume on the two bourses came to 907.2 billion yuan (US$128.4 billion), compared with 746.6 billion yuan in the previous session.

The increase in trade volume and recovering market confidence boosted leisure service shares, property developers and food and beverage manufacturers.

Real estate companies rose across the board. Shares of Greenland Group and Gree Real Estate soared by the daily limit.

A private survey showed Chinese manufacturing activity in June grew more than expected, with the Caixin/Markit manufacturing Purchasing Manager’s Index (PMI) rising to 51.2 from 50.7 in May.

The rise was in line with the official manufacturing PMI and suggests some good short-term momentum toward a recovery, Nomura’s global markets research said.

The People’s Bank of China decided to cut relending and rediscounting rates, Xinhua news agency reported late on Tuesday.

With effect from Wednesday, it will lower the interest rates of reloans supporting agriculture and small firms by 0.25 percentage points, while lowering rediscount rates by 0.25 percentage points to 2 percent.

Through these rate cuts, the bank is conveying that it will maintain its easing stance and that it will increase the use of relending and rediscounting, Nomura noted.

The Japanese investment bank believes the impact of these rate cuts hinges on the size of new re-lending and re-discounting loans and it expects measures such as reserve requirement ratio cuts and medium-term lending facility rate cuts are on the table.

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