SHANGHAI: Chinese stocks surged for a second day on Friday as a government rescue plan offered a respite from a month-long rout, but analysts warned of further uncertainty and volatility ahead.
The rally also provided some support to regional markets and commodities, which had earlier this week been hammered by fears about a spillover effect beyond the mainland.
The benchmark Shanghai Composite Index shot up 4.54 percent, or 168.47 points, to 3,877.80 on turnover of 680.4 billion yuan ($111.3 billion), taking its two-day rise over 10 percent.
In a roller-coaster week, the Shanghai market gained 5.18 percent overall, after the government announced additional policies to avoid a market crash.
But it is still down 24.9 percent from its closing peak on June 12.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 4.09 percent, or 79.91 points, on Friday to 2,035.26 on turnover of 247.3 billion yuan, still losing 3.01 percent over the week.
The government boost came after the Shanghai index plunged by almost a third in less than four weeks, wiping trillions of dollars from market capitalisation, spreading contagion in regional markets, and raising fears over the potential impact to the real economy.
The tide turned after the government launched a police crackdown on short-selling and banned big shareholders — those holding at least five percent stakes — and company executives from selling stock for the next six months.
