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Chinese stocks rose for a third straight day on Wednesday after the central bank vowed to support economic growth, but investors were reluctant to chase stocks too high on concerns that the rebound was due to technical factors and may be short-lived.
The People’s Bank of China had made clear on Tuesday it was ready to fight any downturn in the world’s second-largest economy, but added it would avoid “pumping out’’ too much cash.
The comments reinforced expectations that more policy easing is on the cards. Such a view has helped fuel a stock market surge of nearly 30 per cent in the last few months, though the rally has shown signs of flagging in recent weeks as more firms issue profit warnings.
“We’re seeing a technical rebound as expectations of further policy support help stabilise the market,’’ said Shen Zhengyang, analyst at Northeast Securities.
“But we don’t see fresh capital flowing in as the market doesn’t guarantee red envelopes ahead of the Lunar New Year,’’ he added, referring to the customary gifts of cash in red packets for the holiday.
The CSI300 index ended the morning session up 0.6 per cent at 3,426.22 points, while the Shanghai Composite Index was up 0.2 per cent.
But Hong Kong shares fell, with the Hang Seng index down 0.8 per cent and the Hong Kong China Enterprises Index marginally weaker.
Trading volumes in Shanghai remained thin, after hitting a fresh three-month low on Tuesday, as many investors await clues on whether the economy is bottoming out.
Although the market expects fresh monetary easing measures - China International Capital Corp forecast another interest rate reduction and three reserve ratio cuts ahead - analysts said they are aimed at bolstering the economy, rather than the stock market.
In a sign of waning interest in stocks, the number of new trading accounts opened last week totalled 384,800, down nearly 20 per cent from the previous week, according to the China Securities Journal.
Software and telecom stocks climbed on Wednesday, as investors bet the $1 billion anti-trust fine China slapped on US chipmaker Qualcomm Inc would benefit domestic rivals. ZTE Corp jumped 3.5 per cent, while Datang Telecom Technology Co was up 2 per cent.
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