BEIJING: China’s stocks rose to a 11-week high as the government’s plan to resume initial public offerings by the end of the year boosted brokerages and banks. Bonds slumped.
The Shanghai Composite Index climbed 1.6 percent to 3,648.42 at the 11:30 a.m. break, heading for the highest close since Aug. 20. A gauge of financial companies jumped 2.3 percent, with China Citic Bank Corp. rallying by the 10 percent daily limit and Western Securities Co. surging 6 percent. Under the plan announced late Friday by the securities regulator, investors will no longer be required to deposit funds when applying for new share subscriptions. The yield on sovereign notes due October 2025 climbed 13.5 basis points to 3.27 percent, the biggest jump in two years.
China’s plan to lift a five-month freeze on new share sales signals growing confidence by authorities that the stock market can stand on its own after the Shanghai Composite rallied back into a bull market last week. The move will also help Chinese companies tap into an important source of financing as they seek to cut debt levels from highs.
“Given the strength of the market, the regulators believe the market can well weather an increase in stock supply now,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co., who recently increased his stock holdings to between 70 percent and 80 percent of assets. “The market interprets this as positive news as IPOs can bring some good companies here. The rally will probably continue.”
