March 6, 2020 / 4:59 AM / a month ago

China stocks head for best week in a year on policy hopes, easing virus worries

SHANGHAI, March 6 (Reuters) - China stocks fell on Friday, tracking losses in overseas markets, but were on track for their biggest weekly advance in a year as investors expected more policy support to shore up the world’s second-largest economy hit by the coronavirus outbreak. ** Friday’s drop came after a sharp selloff overnight on Wall Street, as large swings in the market continued amid uncertainty over the spread of the coronavirus and its economic fallout. ** So far, the virus has spread from China to more than 80 countries, infecting more than 95,000 people and killing over 3,000. It has also doused expectations for a global economic rebound and triggered an unscheduled U.S. interest rate cut this week, the biggest since the global financial crisis. ** Though for the week, SSEC was up 5.6%, while CSI300 gained 5.4% by midday, both on track for their biggest weekly rise since the week of March 1, 2019, as investors welcomed Beijing’s latest supportive measures and expected further stimulus to bolster the country’s economy. ** The coronavirus likely halved China’s economic growth in the current quarter compared with the previous three months, more severe than thought just three weeks ago and triggering expectations for earlier interest rate cuts, a Reuters poll found. ** China will step up funding support for local government bodies to ensure smooth operations as the outbreak takes a toll of their revenues, Vice Finance Minister Xu Hongcai said on Thursday. ** Chinese policymakers have implemented a raft of measures to support an economy jolted by the coronavirus that is expected to have a devastating impact on first-quarter growth. ** Analysts argued that global monetary easing, including the U.S. Fed’s recent rate cut, would give Beijing further monetary room to tackle the virus hit. ** The A-share market has been in a structural bull market, while there are quite a few new funds issued around the Lunar New Year holiday which bought shares on the dip recently, helping underpin the market, said Niu Chunbao, chairman & chief investment officer at Wanji Asset, a Shanghai-based private equity fund. ** The coronavirus outbreak in China has also been brought under control now, Niu added. ** China’s central province of Hubei, excluding the provincial capital Wuhan, reported zero new cases of coronavirus over 24 hours for the first time during the outbreak, as authorities continued to contain imported infections in other parts of the country. (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Maju Samuel)

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