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China stocks jumped more than 4 percent on Monday on possible restructuring among major shipping firms and in other key sectors, and on hopes that less volatile trading may soon convince fund managers to get off the sidelines and re-invest billions in cash.
The CSI300 index rose 4.5 per cent to 4,084.36 points in its biggest daily gain since July 10.
The Shanghai Composite Index climbed 4.9 per cent to 3,928.82, its best day since July 9.
Mainland investors focused on sector-specific news and brushed off gloomy China data at the weekend on trade and inflation, which reinforced expectations that Beijing will need to roll out more support measures for the economy.
“China’s economic indicators are not very good which means monetary policy will continue to be accommodative,’’ said Du Changchun, an analyst at Northeast Securities in Shanghai.
“Investors are also betting that SOE (state-owned enterprise) reforms will inject life into the market. Trading volumes in the stock market today picked up which is a good sign to show that funds are flowing into the market,”’ Du said.
Shipping, railway and cement counters all saw strong buying on expectations of policy support and sector reforms, analysts said.
Trading in some major shipping stocks, including China Shipping Development, China Shipping Container Lines and China COSCO Holdings, was suspended on Monday pending announcements, adding to speculation they may be merged.
The CSI 300 infrastructure index surged more than 6 per cent, CSI energy index climbed 5.4 per cent, while the real estate index rose 4.6 per cent.
China is banking on increased infrastructure spending to support the economy in the second half of the year, while its top economic planning body said on Monday the property market was likely to continue to improve in the second half of this year.
Close to 300 China funds that oversee more than 1 trillion yuan ($161 billion) are sitting on the sidelines with “ammunition’’ to enter the stock markets at any time, the Shanghai Securities News reported on Friday, citing its own calculations.
In recent weeks, Beijing has rolled out an unprecedented series of support measures to prevent a full-blown market crash, including cajoling Chinese brokerages and pension funds to buy stocks and cracking down on short-selling.
Stocks tumbled as much as 30 per cent at one point in early summer on panic selling, but have started moderating in recent weeks.
Goldman Sachs analysts estimate that the “national team’’ has potentially spent 860-900 billion yuan to support the stock market in June-July and the potential aggregate size of market-support funds is probably around 2 trillion yuan.
Among the most active stocks in Shanghai was China Shipbuilding Industry, up 10 per cent, and China National Nuclear Power surged 9.98 per cent.
Among the most traded in Shenzhen, East Money Information jumped 10 per cent, and Wanxiang Qianchao was up 5.1 per cent.
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