China stocks jump as government restores faith

Chinese stocks surged for a second day today as a government rescue plan offered a respite from a month-long rout, but analysts warned of further uncertainty and volatility ahead.
The rally also provided some support to regional markets, which had earlier this week been hammered by fears about a spillover effect beyond China's borders.
By midday, the benchmark Shanghai Composite Index had surged 5.16 per cent, or 191.56 points, to 3,900.89.
The Shenzhen Composite Index, which tracks stocks on China's second exchange, jumped 4.00 per cent, or 78.26 points, to 2,033.61.
The Shanghai market rocketed 5.76 per cent yesterday, after the government announced additional policies to avoid a market crash.

They came after the index plunged by almost a third in less than four weeks, wiping trillions from market capitalisations, spreading contagion in regional markets, and raising fears over the potential impact to the real economy.

The tide turned after the government banned big shareholders - those holding at least five percent stakes - and company executives from selling stock for the next six months, and launched a police crackdown on short-selling.
"Market sentiment has definitely reversed significantly and started to stabilise, so it's safe to say that the state's measures have won initial success," Phillip Securities analyst Chen Xingyu told AFP.

"However, there is still a chance for the market to see a second withdrawal (of funds) after big rises like this, but it won't be as lasting and as deep as earlier plunges," he said.
The announcement also helped reverse losses in other Asian markets, with Hong Kong surging for the past two days, while Tokyo, Sydney and Seoul among others also enjoying healthy gains.
Today, more than 1,300 companies remained halted from trading, nearly half of total listings, Bloomberg News reported. Trading suspensions tend to slow market activity and defer risk until later.
The stock market slide was a dramatic reversal of a 150 per cent charge in the 12 months to its peak last month, fuelled by tens of millions of retail investors using borrowed funds.