BEIJING: China’s stocks rose, with the benchmark index poised to enter a bull market, as ordinary investors returned to buy shares after an unprecedented state rescue effort halted a $5 trillion crash.
The Shanghai Composite Index climbed 2.7 percent to 3,552.76 at the break, taking its advance from its Aug. 26 low to more than 20 percent. Gains on Thursday were led by brokerages. The Hang Seng China Enterprises Index rose 1 percent in Hong Kong at 11:43 a.m., extending a 17 percent advance since this year’s Sept. 7 low.
The government took extreme measures to shore up equities as a boom turned to bust in June, including banning major stockholders from selling shares, curbing short selling and directing state funds to purchase equities. While government-owned funds still influence the market, evidence of heavy intervention has dwindled as late-day rallies become less frequent. Margin debt is also rising, volumes have stabilized and companies favored by individual investors are leading the rebound.
“All the sellers who needed to sell have,” said Francis Cheung, a senior strategist at CLSA Ltd. in Hong Kong. “The government has successfully clamped down on short selling. So it is easier for market to go up, especially with anticipation that China will cut rates and do more stimulus.” He said he favored interest-rate sensitive sectors such as banks, property and Internet companies.
