China stocks end a solid February with small rises

China stocks closed up on Friday, ending the month up more than 3 percent as investors increased bets on coming monetary easing. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.2 percent on Friday, to 3,572.84, gaining 1.4 percent for the week, while the Shanghai Composite Index gained 0.4 percent, to 3,310.30 points, up 2 percent for the week.
For the month, the CSI300 gained 4.0 percent and the SSEC 3.1 percent. Among the most active stocks in Shanghai on Friday were Bank of China, down 0.7 percent to 4.11 yuan; China Petroleum, up 2.9 percent to 6.31 yuan and United Network, up 5.6 percent to 5.65 yuan. In Shenzhen, TCL Corp, up 7.0 percent to 5.02 yuan; BOE Technology, up 2.3 percent to 3.16 yuan and Shantui Construction, up 1.6 percent to 7.62 yuan were among the most actively traded.
Total volume of A shares traded in Shanghai was 29.8 billion shares, while Shenzhen volume was 18.2 billion shares. Manufacturing and mining stocks led the indices higher, while financials were mostly lower. China stocks rose after domestic media reported easing measures for small banks in Zhejiang province, and looked set to post solid gains for the month.
The reports of further reductions in city banks' reserve requirement ratios (RRR) added to expectations that authorities will soon roll out more nation-wide stimulus measures to support the slowing economy. The People's Bank of China made a system-wide cut to bank reserve requirements on February 5, the first time it has done so in over two years, and said it would cut RRR by an additional 50 basis points for qualified urban and rural banks if they applied for it. Information technology, financial and manufacturing stocks led indices higher.
Rising costs for call options on the Shanghai Composite Index, along with rising prices for CSI300 index futures also suggested that investors expect stocks to keep marching higher in the near term. China CSI300 stock index futures for March rose 0.9 percent to 3,618, 27.13 points above the current value of the underlying index. For the month of February, the CSI300 was up 4.6 percent and the Shanghai Composite was up 3.3 percent. A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.