China stocks end higher as Beijing pledges reforms, liquidity

SHANGHAI: China stocks ended firmer on Thursday, as policymakers assured investors that the economy is gradually recovering from the coronavirus crisis, while pledging more reforms and liquidity to bolster capital markets.

At the close, the Shanghai Composite index was up 0.12pc at 2,939.32, while the blue-chip CSI300 index was up 0.67pc.

The smaller Shenzhen index ended up 0.24pc and the tech-heavy start-up board ChiNext Composite index was higher by 0.091pc.

China will maintain ample financial system liquidity in the second half of the year as the economy recovers from the coronavirus but will need to consider withdrawing that support at some point, its central bank governor warned on Thursday.

New loans are likely to hit nearly 20 trillion yuan ($2.83 trillion) this year, up from a record 16.81 trillion yuan in 2019, and total social financing could increase by more than 30 trillion yuan, the governor said.

Earlier in the day, the People's Bank of China made its first 14-day reverse repo injection since February, and cut the rate 20bps.

China's top securities regulator said on Thursday that the country would continue to "comprehensively deepen" capital market reform, and that the top priority is to help market confidence recover amid the pandemic.

The remark came after Beijing finalised over the weekend new IPO rules for Shenzhen's ChiNext startup board, as it pushed forward with reforms in its capital markets.

Concerns over a sudden jump in virus cases in Beijing eased somewhat as investors expected Beijing's containment measures would soon bring it under control.

The Chinese government has taken swift measures to handle the new cases in Beijing, said Zhou Longgang, an analyst with Huachuang Securities.

China reported 28 fresh COVID-19 cases in the mainland as of end-June 17, 21 of which were in the capital of Beijing, the country's health commission said on Thursday.

Bucking the broad strength, Chinese banking shares slipped after government said it will push for them to surrender profits to help bolster the economy.