February 17, 2020 / 8:02 AM / a month ago

China stocks recoup virus losses as Beijing steps up stimulus

* Shanghai shares, blue-chips both add 2.3%

* Indexes reverse losses since Lunar New Year break

* Central bank trims MLF rate, paves way for benchmark cut

* Refi reform, PBOC stance help stocks rally - Morgan Stanley

SHANGHAI/HONG KONG, Feb 17 (Reuters) - China stocks ended higher on Monday, reversing all of their early plunge triggered by the coronavirus outbreak, as policymakers ramped up support for the economy and companies that have been hit by a slump in sales and activity. ** At the close, the Shanghai Composite index was up 2.3% at 2,983.62, marking its largest daily percentage gain since last June. The blue-chip CSI300 index also rose 2.3%, its best daily performance in close to two weeks. ** Both indexes fully recouped the steep losses they suffered on the first trading day following the Lunar New Year break. Around $700 billion in market capitalisation was wiped out. ** CSI300’s financial sector sub-index was higher by 2.3%, the consumer staples sector edged up 0.8%, the real estate index ended down 0.2% and the healthcare sub-index closed 1.7% firmer. ** China’s central bank cut the interest rate on its medium-term lending on Monday, paving the way for a reduction in the country’s benchmark loan prime rate (LPR), which will be announced on Thursday.

** On Friday, China’s securities watchdog loosened refinancing rules for listed firms by scrapping profitability requirements for private placements on Shenzhen’s start-up board ChiNext.

** The ChiNext Composite index rallied 3.7% to touch a fresh three-year high, while Shenzhen shares ended 3.2% firmer.

** Morgan Stanley analyst Laura Wang said in a note that the refinancing rule change, which boosted liquidity particularly for small- and medium-cap stocks, and the PBOC’s supportive stance were among drivers behind Monday’s rally. ** The number of reported new cases of coronavirus in China’s Hubei province rose on Monday after two days of falls.

** Signs of economic strain from the outbreak are surfacing. New home prices in China grew at their weakest pace in nearly two years in January. The country’s top auto industry body said car sales could slide more than 10%. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.2%, while Japan’s Nikkei index closed down 0.7%. ** At 0712 GMT, the yuan was 0.12% firmer at 6.9797 per U.S. dollar. ** So far this year, the Shanghai stock index is down 2.2% and the CSI300 dropped 0.5%. Shanghai stocks climbed 0.2% so far this month. ** About 31.32 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 25.07 billion. ** As of 0715 GMT, China’s A-shares were trading at a premium of 24.39% over the Hong Kong-listed H-shares. ** The Shanghai stock index is above its 50-day moving average and above its 200-day moving average. (Reporting by Luoyan Liu and Noah Sin, Editing by Sherry Jacob-Phillips)

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