Chinese Stocks Rise to Two-Week High as Price Swings Wane

  • Days of wild swings may be over, Jingxi Investment's Wang says
  • Technology shares, gold companies lead advance in Shanghai

Chinese stocks rose to a two-week high as volatility slumped amid growing investor confidence state intervention has stabilized equities.

The Shanghai Composite Index climbed 0.9 percent to 3,647.93 at the close, led by technology and gold companies. While price swings in the gauge have fallen to an eight-month low and the number of new investors jumped to a four-month high, turnover slumped with trading volumes 19 percent below the 30-day average on Wednesday.

A sense of calm has returned to the stock market as authorities announced the resumption of initial public offerings, scrapped a rule requiring brokerages to hold net long positions and limited leveraged bets. The Shanghai gauge has rebounded 25 percent from its August low, after tumbling 43 percent from its June peak.

“The market has basically stabilized and we are not likely to see very wild swings as what happened during the stocks rout,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co., who’s keeping his stock allocation unchanged at 80 percent. “We’ll see more market functions go back to normal in the future.”

In a market where daily fluctuations exceeding 3 percent were once the norm during a mid-year rout, this week’s moves of less than 1 percent in the Shanghai index have barely registered on price charts. The gauge’s 10-day historical volatility is at a fifth of the August peak.

The CSI 300 Index gained 0.7 percent. Hong Kong’s Hang Seng China Enterprises Index dropped 0.3 percent, while the Hang Seng Index lost 0.4 percent. The ChiNext index, dominated by technology and new economy shares, jumped 2.9 percent, closing at the highest level since July 24.

East Money Information Co., the second-biggest stock in the ChiNext, surged 3.9 percent. Hundsun Technologies Inc., whose financial investment platform known as HOMS allows trust firms and online lenders to provide leveraged trading facilities to clients, jumped 5.6 percent. The outstanding balance of Shanghai margin debt dropped 0.1 percent to 724.4 billion yuan ($113.4 billion) for a second day on Tuesday.

Zhongjin Gold Corp. led gains for bullion producers, advancing 3 percent, while Shandong Gold Mining Co. surged 4.2 percent. Bullion held the first increase in three days on rising geopolitical tensions after Turkey said it downed a Russian fighter jet, spurring demand for haven assets.

Citic Securities Co., the biggest-listed Chinese brokerage, slipped 1 percent. The Securities Association of China said it’s investigating the company for over-reporting equity-swap data by 1 trillion yuan between April and September.

In Hong Kong, billionaire Li Ka-shing’s Power Assets Holdings Ltd. fell 2.9 percent after shareholders rejected a $12.4 billion deal from the city’s richest man.

— With assistance by Shidong Zhang

Before it's here, it's on the Bloomberg Terminal.