Chinese brokerages rallied after policy makers loosened controls on margin lending, which helped fuel last year’s stock-market boom.
Everbright Securities Co. was among brokerages that jumped by the 10 percent daily limit Monday after China Securities Finance Corp. said it will restart offering loans to securities firms for periods ranging from 7 days to 182 days. The state-backed agency, which provides funding to brokerages for margin trading, will cut interest rates on the debt to as low as 3 percent, it said in a Friday statement.
The amount of shares purchased on margin has plunged more than 60 percent from last year’s pre-rout peak as traders fled Chinese equities and regulators made it harder for investors to access loans.
The lower lending rates “will ease brokerages’ funding costs,” Luo Yi, a Shenzhen-based analyst at Huatai Securities Co., said in a note. “The policy change may also signal a bottom for the stock market. A modest expansion in margin finance, which is now at a low level, will help support sentiment.”
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 2.4 percent to3,249.44 points, while the Shanghai Composite Index gained 2.2 percent to 3,018.80.
Hong Kong shares edged up on Monday after mainland markets were buoyed by an announcement that the state margin lender would resume some of its short-term lending business and cut borrowing costs for brokerages.
The Hang Seng index rose 0.1 percent, to 20,684.15, while the China Enterprises Index gained 0.5 percent, to 8,928.65 points.
European shares fell on Monday, as a decline in the share prices of major mining stocks and in French supermarket operator Casino weighed on the region's stock markets.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were both down by 0.7 percent.
Mining and steel stocks such as ArcelorMittal and Glencore fell as metals prices weakened.
Shares in Casino also fell after Standard & Poor's cut its rating on the company.
Reference: Reuters, Bloomberg
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