China's main stock index rose 2.2 percent on Wednesday, rebounding from near key chart support, after an official's remarks were interpreted to mean Beijing did not plan to sell off large shareholdings in listed companies.
The rise was also fuelled by the return of money to unsuccessful retail bidders for a massively subscribed IPO by China Pacific Insurance. The Shanghai Composite Index, which had dropped 3.4 percent over the previous two days, closed a provisional 2.18 percent higher at 4,941.784 points.
Li Rongrong, head of China's state asset management agency, was quoted by the official Shanghai Securities News as saying controlling state shareholders in listed companies should not speculate in stocks, but should aim instead to strengthen the firms' core businesses and create steady returns.
While state shareholders may sell stocks if they think companies have become highly overvalued, they could also buy stocks if they became undervalued, Li was quoted as saying.
The moderate tone of Li's comments, and his reference to buying stocks if the market fell, appeared to indicate that large sales were not being planned and that the government's attitude to the market remained fairly benign, analysts said.
Most of the biggest state-controlled companies rose after Li's remarks. Recently listed PetroChina, the market's mostly heavily weighted stock, climbed 1.20 percent to 29.59 yuan after tumbling on Tuesday to a record intra-day low of 29.15 yuan. Analysts also noted that the index had neared important technical support at its late November low of 4,778.727 points.
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