Chinese Stocks Rebound as Brokerages Gain With Robot Companies

  • Brokerages advance as sources say proprietary trading relaxed
  • Robot-related companies rally on improving growth prospects

Chinese stocks rose, erasing losses, as brokerages rallied on speculation the government will allow them to freely conduct proprietary trading after imposing restrictions following a market rout earlier this year.

The Shanghai Composite Index added 0.2 percent to 3,616.11 at the close, wiping out a loss of as much as 1.3 percent in the last five minutes of trading. Northeast Securities Co. and Founder Securities Co. gained more than 4 percent after people with knowledge of the matter said regulators have scrapped a rule requiring brokerages to hold daily net long positions. Robot-related stocks rallied after state media reported the government would promote development of the industry.

“It’s a further sign that the government is confident that the market has stabilized and basically gone back to normal,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “It’s good news for brokerages as they don’t need to be burdened with the task of supporting the market.”

The Shanghai Composite has rebounded 23 percent from an August low after the government took unprecedented measures to stabilize equities following a $5 trillion rout including compelling major shareholders to buy back their equities and halting initial public offerings. The China Securities Regulatory Commission last week gave the green light to 10 companies to restart their IPOs. Subscription for the new share offerings will take place in the first three days of next week.

Brokerages Gain

The Hang Seng China Enterprises Index slid 0.7 percent in Hong Kong, while the Hang Seng Index lost 0.4 percent. The CSI 300 Index rose less than 0.1 percent. Trading volumes in the Shanghai index were 27 percent lower than the 30-day average on Tuesday.

Northeast Securities jumped 8.9 percent, while Founder Securities added 4.3 percent. Everbright Securities Co. rose 3.9 percent.

The CSRC has issued a notice saying it’s easing control over the brokerages’ proprietary accounts amid a gradual stabilization in equities, according to the people, who asked not to be identified as the circular hasn’t been made public. The regulator will allow the market to resume self-regulation and it will resume routine monitoring of securities institutions, the people cited the notice as saying. The CSRC didn’t immediately reply to questions faxed by Bloomberg News.

Robot Stocks

Siasun Robot & Automation Co. gained 0.6 percent, while Nanjing Estun Automation Co. jumped 4.6 percent.

China aims to be world’s largest robotics market amid rising demand from the Internet and manufacturing sectors, the Shanghai Securities News reported, citing written comments from Premier Li Keqiang for the opening ceremony of the 2015 World Robot Conference held in Beijing. China’s sales of industrial robots rose 55 percent last year, a quarter of global sales, the Xinhua News Agency reported.

A sub-index of material stocks in the CSI 300 fell 0.3 percent. China Molybdenum Co. declined 3.9 percent, while Yunnan Copper Co. dropped 1.1 percent. Industrial metal prices have declined 28 percent this year, the worst annual drop since the global financial crisis, amid the slowest growth in a quarter of a century in China, the world’s biggest consumer, and concern that mining companies are not willing to cut production enough.

— With assistance by Shidong Zhang

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