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China stocks post best gains in 3 weeks as Beijing official says economy steadier
March 13, 2017 / 7:33 AM / 9 months ago

China stocks post best gains in 3 weeks as Beijing official says economy steadier

SHANGHAI (Reuters) - China stocks posted their best gains in three weeks on Monday after a senior research official said over the weekend that the world’s second-largest economy was on steadier footing.

FILE PHOTO - A man looks at an electronic board at a brokerage house in Shanghai August 31, 2009. REUTERS/Aly Song/File Photo

The blue-chip CSI300 index rose 0.9 percent to 3,458.10 points, while the Shanghai Composite Index gained 0.8 percent to 3,237.02.

Li Wei, director of the Development Research Centre of the State Council, said on Sunday that the risk of a sharp slide in China’s economy has decreased.

He said the economy had moved through an “L-shaped” pattern of slowing to now “horizontal” growth.

Fears of more forceful monetary tightening in China also abated after a senior government official said on Sunday that the debt risk for China’s main state-owned enterprises (SOEs) is controllable.

On Friday, China’s central bank governor Zhou Xiaochuan said that it would take time to bring down corporate debt levels.

The central bank has gently lifted short-term interest rates twice this year and is expected to bump them up again in coming months as a more stable economy gives policymakers the confidence and room to tackle financial risks such as high corporate leverage ratios.

Data on Tuesday is expected to show China’s industrial output and investment growth picked up in the first two months of the year, though retail sales may have expanded at a slightly slower pace.

Traders said China’s markets have largely priced in a U.S. rate rise expected later this week.

Sealand Securities said in its latest strategy report that although another U.S. rate hike would have short-term impact on the yuan and domestic liquidity, the “marginal” impact was becoming smaller and smaller, limiting the risk of a further slide in stocks.

Sectors rallied across the board, led by real estate and material shares, which rose on expectations that prices of raw materials will rise further on the back of a recovery in the global economy.

Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill

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