China stocks at highest in 2 weeks as central bank seeks to stabilise yuan

SHANGHAI: Shares in China ended at two-week highs on Monday, lifted by a stronger yuan after a tweak in the central bank’s management of the currency boosted airline stocks and other firms with heavy dollar exposure.

The Shanghai Composite Index closed up 1.9 per cent at 2,780.90, its biggest daily percentage gain since August 7.

China’s blue-chip CSI300 index ended 2.4 per cent higher, while the financial sector subindex rose 1.7 per cent.

The consumer staples sector gained 3.9 per cent, while the real estate index was up 4.2 per cent and the health care subindex rose 3.9 per cent.

Consumer, health care and real estate firms have suffered during a market slump in recent weeks, dogged by a vaccine scandal that has undermined consumer confidence, and concern over stepped-up property controls.

The yuan hovered at a 2-1/2-week high against the US dollar on Monday after China’s central bank revived a “counter-cyclical factor” in its daily fixing to support the currency, arresting a record 10-week slide that has rattled global markets.

The yuan was quoted at 6.8167 per US dollar, 23 pips firmer than the previous close of 6.819.

Airline shares were among the winners on Monday as investors bet that a stronger yuan would boost their bottom lines. China Southern Airlines gained 4.5 per cent and Air China was up 3.3 per cent.

A broader index of transport firms gained 1.9 per cent.

The smaller Shenzhen index rose 2.5 per cent and the start-up board ChiNext Composite index ended 3 per cent higher.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.1 per cent while Japan’s Nikkei index ended 0.9 per cent higher.

Shares around the region were supported by Federal Reserve Chair Jerome Powell’s comments on Friday that a gradual approach to raising rates was best to protect the US economy and job growth.

The largest percentage gainers in the main Shanghai Composite Index were Tianjin Quanyechang Group Co Ltd, which rose 10.09 per cent, Shanghai 3F New Materials Co Ltd, which gained 10.02 per cent, and CIG ShangHai Co Ltd, which finished 10.02 per cent higher.

Shanghai’s largest percentage losses were led by Gansu Gangtai Holding Group Co Ltd, down 10.07 per cent, followed by Xinjiang Korla Pear Co Ltd losing 9.96 per cent and Anxin Trust Co Ltd down by 6.6 per cent.

The Shanghai index is down 15.9 per cent so far this year, while China’s H-share index is off by 5.4 per cent. Shanghai stocks have declined 3.32 per cent this month.

— Reuters