October 22, 2018 / 7:43 AM / 24 days ago

China shares leap 4 pct on authorities' pledges of support, tax changes

* SSEC +4.1 pct, CSI300 +4.3 pct

* Strongest day for blue-chips shares since Nov. 2015

* Securities sector sub-index surges 10 pct (Updates to close)

SHANGHAI, Oct 22 (Reuters) - China’s benchark blue-chip index surged over 4 percent on Monday, posting its best daily performance in almost three years, as investors piled into the battered market after coordinated statements of support by senior regulators.

The market was also encouraged by news that China is preparing to overhaul its income tax law for individuals, with Shanghai trading turnover rising to a three-month high.

The blue-chip CSI300 index rose 4.3 percent, to 3,270.27, its best day since November 2015. The Shanghai Composite Index jumped 4.1 percent, its biggest one-day gain since March 2016. Shenzhen’s start-up board ChiNext surged 5.2 percent.

The market extended a rally that started on Friday, when Chinese Vice Premier Liu He, who oversees the economy and financial sector, joined the heads of the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, and the People’s Bank of China in coordinated statements to rally investor confidence amid a bruising market slump.

On the weekend, President Xi Jinping added his voice to the chorus, declaring that the Communist Party would always support private firms’ development, and that the role of the private economy is unquestionable, according to the official Xinhua news agency.

Yang Hai, an analyst at Kaiyuan Securities in Xi’an, said the statements of support “laid the foundations for a rebound” after a slump caused by factors including the Sino-U.S. trade war, domestic economic adjustments and especially concerns over the rising risk of forced margin calls.

“We see a high likelihood that the A-share market will enter a period of rebound,” Yang said in a note. He added that planned tax cuts and the release of individual income tax deductions would particularly support banks, insurance and consumer firms.

China’s government on Saturday published a draft version of new rules for tax deductions available to individuals as it overhauls its individual income tax law, a move to cut taxes to try to spur growth.

Investors snapped up shares across sectors, with securities firms seen as particularly likely to benefit from official moves to support stock markets. A sub-index of the CSI300 tracking securities firms leaped the daily limit of 10 percent.

The CSI financial sector sub-index gained 4.37 percent, the consumer staples sector added 4.35 percent, the real estate index jumped 4.50 percent and the healthcare sub-index was 5.07 percent higher at midday.

The smaller Shenzhen index ended 4.9 percent higher.

Despite the gains, the Shanghai Composite index is still down 19.7 percent for the year, while the CSI300 has fallen 18.9 percent.

China’s currency remained fell slightly against the U.S. dollar, but losses were contained by the surge in equity markets. At around 0733 GMT the yuan was quoted at 6.9334 per U.S. dollar, compared with an onshroe trading close of 6.9290 per dollar on Friday.

Reporting by Andrew Galbraith; Editing by Simon Cameron-Moore

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below