BEIJING: Chinese stocks rose for a second day as funds flowed back to the equities market after a flood of new share offerings last week.
Power and industrial companies led gains, with Huadian Power International Corp. jumping by the daily limit of 10 percent and Air China Ltd. posting its biggest two-day advance in seven months. China’s benchmark money-market rates dropped for the first time in two weeks as funds started returning to the stock market after an estimated 6.7 trillion yuan ($1.08 trillion) of liquidity was locked up due to initial public offerings last week.
“The expectation was for the market to rebound as there is a substantial amount of money locked up that it is going to be released today,” said Gerry Alfonso, a director at Shenwan Hongyuan Group Co. in Shanghai.
The Shanghai Composite Index climbed 1.5 percent to 4,643.94 at 9:52 a.m., extending Tuesday’s 2.2 percent jump. The gauge plunged 13 percent last week, the worst weekly loss since the 2008 global financial crisis.
The CSI 300 Index advanced 1 percent. Hong Kong’s Hang Seng China Enterprises Index added 1 percent, while the Hang Seng Index increased 0.4 percent.
Last week’s declines came after the Shanghai gauge surged 152 percent in the past year on a record jump in margin debt and bets the government will lower borrowing costs. The measure is valued at 17.3 times 12-month projected earnings, down from a five-year high of 19.5 set earlier this month, according to data compiled by Bloomberg.
