China stocks jump again as emergency measures bite
By Samuel Shen and Engen Tham
SHANGHAI (Reuters) - Chinese stocks rose strongly for a second day on Friday, buoyed by a barrage of government support measures, but worries persist about the long-term impact that four weeks of market turmoil may have on the world's second-largest economy.
Over the past two weeks Chinese authorities have cut interest rates, suspended initial public offerings, relaxed margin lending and collateral rules and enlisted brokerages to buy stocks, backed by cash from the central bank.
Some analysts predict further moves to come from the People's Bank of China, which often makes policy announcements over the weekend, such as another rate cut or relaxation of the amount of cash banks must hold as reserves (RRR).
The frantic efforts to stem a more than 30 percent market slide finally began to gain traction on Thursday, when shares rose around 6 percent after the securities regulator banned shareholders with large stakes in listed firms from selling.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen rose another 5.4 percent on Friday, while the Shanghai Composite Index .SSEC closed up 4.5 percent.
"Chinese investors move in herds," said Samuel Chien, a partner of Shanghai-based hedge fund manager BoomTrend Investment Management Co. "After panic selling drove the market down to the extreme, prices are now starting to move in the other direction."
RIPPLE EFFECT Continued...