The Global Times reports how the Chinese shares bounced back on Tuesday after suffering a hefty loss the previous day, as panic over the coronavirus epidemic eased and amid government efforts to replenish liquidity.
Key notes
- The two mainland bourses opened lower but quickly flashed green. By the end of the afternoon session, the Shanghai Composite Index had risen by 1.34 percent to 2,783.29 points. The Shenzhen market bounced back to over 10,000 points with a 3.17 percent rally. ChiNext, the NASDAQ-style board soared by 4.84 percent.
- On Monday, mainland stocks saw their biggest flash crash since the 2015 stock nosedive, with the Shanghai market plummeting more than 7 percent. The dive was triggered by worries over the coronavirus outbreak that gradually intensified during the Spring Festival holidays.
- But the mood has eased following government-initiated actions to replenish market liquidity and bolster market confidence.
- China’s central bank injected 1.7 trillion yuan ($243 billion) into markets via reverse repo operations on Monday and Tuesday.
- IMF Managing Director Kristalina Georgieva wrote on her Sina Weibo account, China’s Twitter-like social media platform, that the IMF supports China’s virus-fighting efforts in financial and monetary areas.
- Some domestic securities analysts interviewed by the Global Times said that the quick rebound was within expectations as Monday’s stock plunge was a one-shot correction.
- “The stock rally on Tuesday released a good signal that investor sentiment has improved, although it will still take time for confidence to be completely restored,” said Yang Delong, chief economist at First Seafront Fund.
FX implications
We are seeing some strength through the commodity complex, notably in the Aussie which has been boosted by a more optimistic than expected Reserve Bank of Australia.
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