China’s stocks rebounded from the biggest two-day loss in 18 months as construction companies and banks gained amid speculation the government is taking steps to boost lending and provide financial support for companies to develop their overseas business.
Sany Heavy Industry Co. and Zoomlion Heavy Industry Science and Technology Co. both rallied 10 percent. China Construction Bank Corp. led gains for lenders, rising 6.1 percent. China Business News reported that the central bank won’t require banks to set aside reserves for deposits from non-bank financial institutions. Datang International Power Generation Co. slid 4.6 percent after jumping more than 50 percent this month.
The Shanghai Composite Index surged 2.4 percent to 3,043.50 at the 11:30 a.m. break, heading for the biggest gain since Dec. 10. It had lost 5 percent over the past two days on speculation the government will take action to cool rapid gains in equity prices. The CSI 300 Index advanced 2.6 percent.
“Some investors are bottom-fishing after the pretty big correction over the past few days,” said Wu Kan, a fund manager at Dragon Life Insurance Co. “Machinery companies are the favorite ones for investors now as the government looks like it’s starting to implement specific policies for Chinese companies to go overseas.”
Hong Kong’s stock market is closed today and tomorrow for the Christmas holidays. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, retreated 0.6 percent in New York yesterday.
Trading volumes in the Shanghai Composite were 13 percent below the 30-day average for this time of day, according to data compiled by Bloomberg. The index has risen 44 percent this year on speculation the central bank will extend interest-rate cuts and as investors boosted stock purchases with borrowed money.