BEIJING: China’s stocks rose for the first time in three days as declines for the yuan eased after the central bank signaled support for the currency.
The Shanghai Composite Index climbed 1.8 percent to 3,954.56 at the close, led by technology and power companies. The onshore yuan weakened 0.5 percent, after a two-day loss of 2.8 percent spurred by Tuesday’s surprise devaluation. There’s no basis for depreciation to persist and the currency’s adjustment after the fixing method change is “basically already completed,” Assistant Governor Zhang Xiaohui,, PBOC Assistant Governor Zhang Xiaohui said Thursday at a briefing in Beijing.
The world’s second-biggest economy roiled markets this week by depreciating its currency by the most in two decades. An extended slide risks triggering a series of competitive devaluations and threatens a global deflation shock as prices of exports and commodities fall.
“We felt it’s been an overreaction,” said Sean Darby, Jefferies Group Inc.’s chief global equity strategist in Hong Kong. “I’m sure that people have been disconcerted by the fact that the PBOC decided to surprise the market by letting the exchange rate drop. This has been on the agenda for some time. The move is probably a very good adjustment for China in the longer term.”
