SHANGHAI May 26 China stocks reversed earlier
losses to end the week higher on Friday, led by the blue-chip
CSI300 index posting its best week in six months as suspected
state-directed buying offset concerns over a surprise move by
Moody's to cut the country's credit rating.
For the day, the blue-chip CSI300 index fell 0.2
percent to 3,480.43 points, while the Shanghai Composite Index
added 0.1 percent to 3,110.06 points.
For the week, CSI300 advanced 2.3 percent, while the SSEC
gained 0.6 percent.
Sentiment in the market earlier in the week had been
depressed by lingering concerns over tightening policy and the
growth outlook, with the Moody's downgrade pushing Shanghai
stocks to near seven-month lows on Wednesday morning.
But strong gains in index-heavyweight financial stocks on
suspected government support lifted the market on Thursday amid
growing hopes that global index provider MSCI Inc would add
mainland Chinese shares to its benchmark next month.
An index tracking the country's major lenders
jumped 5.4 percent in its best week since early March, 2016.
"This is apparently a stabilisation effort by the
government. The index has dropped to a very critical level,"
said Wu Kan, head of equity trading at investment firm Shanshan
Finance, referring to the 3,000 points - a key psychological
level closely watched by many traders.
"But the state of stability could be temporary."
State intervention in financial markets is not unheard of in
China. During the market rout of mid-2015, a band of
government-backed investors, dubbed the "National Team", was
ordered to try to stop the bleeding by buying stocks.
There was some speculation online that the National Team was
at it again in the wake of the downgrade.
However, small-caps remained weak, with the nation's
Nasdaq-style board ChiNext dropping 2.3 percent this
week, hovering near a 27-month low, pressured by expectations of
more equity supply and weaker profitability.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Shri