China stocks, currency rise as government shows renewed resolve
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Version 0 of 1. BEIJING — China’s share market rose significantly for a second day Friday, while the central bank also pushed the currency higher, as authorities showed new resolve to calm investors’ frayed nerves. Other Asian markets enjoyed a third day of gains, buoyed by Thursday’s rally on Wall Street. China’s central bank has been intervening heavily to support its currency in recent days and fixed the renminbi’s central rate 0.15 percent higher at 6.3986 to the dollar on Friday. That surprised many people but helped boost confidence among investors in renminbi-denominated assets. Traders said the authorities also appeared to have bought shares on Thursday, inspiring a rally in the stock market late in the trading day. Buoyed by gains in other emerging markets, Shanghai’s main share index closed 4.8 percent higher on Friday. The mood was also better across Asia, with Tokyo’s Nikkei-225 index rising 3.0 percent, and South Korea’s KOSPI index closing 1.6 percent higher. Brokers said Chinese authorities appeared determined to calm the markets ahead of a military parade on Sept. 3 that will celebrate the 70th anniversary of the World War II victory over Japan. They also want to end any market crisis before President Xi Jinping’s state visit to the United States later next month. China’s government is working in overdrive in an attempt to ensure both events go smoothly and burnish Xi’s image. “Over the next three months, China wants to project itself as a stabilizer of the global economy and show that China is strong,” said Gao Song , a managing partner at economic researchers PRC Macro in Beijing. “In that case, they had to support the currency.” In preparation for Xi’s visit to the United States, Obama’s national security adviser, Susan E. Rice, visited Beijing on Friday and is scheduled to meet with the Chinese leader in the afternoon. “Our hard work together on these preparations, I am confident, will result in a visit that we can both look back on with satisfaction,” she told reporters before meeting China’s top diplomat, State Councilor Yang Yiechi. This month’s shock devaluation of the currency had rattled some investors, and Gao said the latest moves to shore it up was helping to calm nerves in the stock market. “The strengthening of the renminbi gives domestic investors more confidence that policymakers are in control of the economy and has dissipated concerns about capital outflows,” he said. Yang Delong, chief strategic analyst at Southern Asset Management in Shenzhen, said panicky investors were gradually calming down and were more were willing to return to the market to buy shares. But he cautioned that prices were still fluctuating. Also supporting optimistic sentiment was an announcement that China’s local pension funds would start investing 2 trillion yuan ($313 billion) in stocks and other assets “as soon as possible.” Pension funds were given the green light to invest up to 30 percent of their holdings in stocks and equity funds last week, but officials said this was designed to boost returns and not support the stock market. “We will formally start investment operations as soon as possible,” Vice Finance Minister Yu Weiping told a news conference. But officials said the actual investment decisions — including the timing of when to invest — would be entrusted to professional investment firms. They said the government would not intervene. “Supporting the stock market or rescuing the stock market is not the function or responsibility of the funds,” said You Jun, vice minister of human resources and social security. On Friday, financial magazine Caixin reported that the China Securities Finance Corp., the state’s margin lender, had applied for a one-year-loan from banks worth around 1.4 trillion yuan ($220 billion) to fund share purchases. Xu Jing contributed to this report. |