Chinese shares staged a strong rebound on Friday despite Beijing's final nod to domestic insurers and banks, allowing them to invest in overseas markets, which could lure some capital outside the country.
Steel stocks rose universally, encouraged by a robust margin forecast from Angang New Steel Co Ltd, while investors also kept chasing banking counters including top Shanghai-listed Merchants Bank Co. The benchmark Shanghai composite index jumped 2.04 percent to 1,359.538 points, its highest level in nearly 17 months, after losing 2.04 percent the previous session.
China's central bank on Friday announced that qualified domestic banks and insurers have been allowed to invest in overseas capital markets, a long-awaited decision which had seemingly little impact on investors' confidence in domestic stock markets.
Analysts said the news of the overseas investment approval had not led to any major concerns about the liquidity of domestic markets in the near term.
Some analysts also attributed the rebound to a belated response to Angang's optimistic forecast issued late on Wednesday.
Angang, the listed arm of Anshan Iron & Steel Group, the number-two Chinese steel maker by capacity, expects its gross profit margin to widen to more than 20 percent this year, due to higher steel prices and the purchase of its parent's production business. Top Chinese steel mill Baoshan Iron and Steel Co Ltd gained 2.6 percent to 4.36 yuan. Wuhan Iron and Steel Co Ltd, the country's third-largest mill, surged 3.9 percent to 2.95 yuan.
Top Shanghai-listed Merchants Bank also rose 2.46 percent to 6.67 yuan by Friday's close.
The index has risen over 17 percent so far this year, due mainly to technical buying after a four-year market slump. Analysts expected the broader upward trend to continue, but also warned of occasional corrections along the way.
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