 "China stocks reverse losses as central bank extends more loans")
Chinese stocks reversed sharp declines and ended higher on Wednesday after the central bank injected more funds into the financial system for a second day in a bid to calm panicky markets. The move by the People's Bank of China helped offset fears that the government is considering scaling back its massive rescue effort for the country's stock markets which it put in place just last month. The CSI300 index rose 1.6 per cent, to 3,886.14, while the Shanghai Composite Index gained 1.2 per cent, to 3,794.11 points.
The indexes had slumped more than five per cent at one point in morning trade, after plunging six per cent on Tuesday following comments by China's securities regulator that the market has normalised and the government would allow market forces to play a bigger role in determining stock prices.
But some analysts said the correction was overdone.
"The regulator's announcement referred to a decrease in the buying rate rather than any sales of holdings, which would seem to indicate that investors are once more overreacting," wrote Gerry Alfonso, director of Shenwan Hongyuan Securities Co.
Indeed, some investors took advantage of the slump to buy relatively cheaper shares, triggering a late-afternoon rebound.
On Tuesday, the central bank injected 120 billion yuan ($18.77 billion) into the money markets through seven-day reverse bond repurchase agreements. It was the largest injection since the week of February 9.
Some analysts suspect government funds also played a role in the market's late-hour rise.
An index tracking stocks partly owned by the state margin lender China Securities Finance Corp (CSFC) ended up three per cent, after falling over four per cent in earlier trading.
Regulators have said that CSFC, which was tasked with buying stocks and proping up prices during the recent market sell-off, would continue to play a stabilising role in the market.
Guangdong Meiyang Jixiang Hydropower Co, which counts CSFC as an investor, slumped 6.4 per cent at midday but surged 10 per cent by the market close.
Fujian Mingdong Electric Power swung from its 10 per cent downward limit, to its 10 per cent upward limit in a dramatic reversal of fortune.
Most sectors, including banks, real estate and healthcare reversed losses and climbed at the end of the session.
The indexes had slumped more than five per cent at one point in morning trade, after plunging six per cent on Tuesday following comments by China's securities regulator that the market has normalised and the government would allow market forces to play a bigger role in determining stock prices.
But some analysts said the correction was overdone.
"The regulator's announcement referred to a decrease in the buying rate rather than any sales of holdings, which would seem to indicate that investors are once more overreacting," wrote Gerry Alfonso, director of Shenwan Hongyuan Securities Co.
Indeed, some investors took advantage of the slump to buy relatively cheaper shares, triggering a late-afternoon rebound.
On Tuesday, the central bank injected 120 billion yuan ($18.77 billion) into the money markets through seven-day reverse bond repurchase agreements. It was the largest injection since the week of February 9.
Some analysts suspect government funds also played a role in the market's late-hour rise.
An index tracking stocks partly owned by the state margin lender China Securities Finance Corp (CSFC) ended up three per cent, after falling over four per cent in earlier trading.
Regulators have said that CSFC, which was tasked with buying stocks and proping up prices during the recent market sell-off, would continue to play a stabilising role in the market.
Guangdong Meiyang Jixiang Hydropower Co, which counts CSFC as an investor, slumped 6.4 per cent at midday but surged 10 per cent by the market close.
Fujian Mingdong Electric Power swung from its 10 per cent downward limit, to its 10 per cent upward limit in a dramatic reversal of fortune.
Most sectors, including banks, real estate and healthcare reversed losses and climbed at the end of the session.