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China shares rally as rate cuts, factory data boost recovery

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Reference:CGTNy | Updated: 1 July 2020

China shares rallied on Wednesday, as the central bank's move on rate cuts and the country's improved June factory data continued to fuel hopes for a quicker economic recovery.

At the midday break, the Shanghai Composite index was up by 0.91 percent at 3,011.77, breaching the key 3,000-point level for the first time since March 6. 

China's blue-chip CSI300 index was up by 1.48 percent, with its financial sector sub-index rising by 1.68 percent, the consumer staples sector up by 3.74 percent, while the real estate index gaining 6.25 percent.

Hong Kong markets are closed on Wednesday for a public holiday. The smaller Shenzhen index was up by 0.82 percent and the start-up board ChiNext Composite index was weaker by 0.35 percent.

China's central bank said on Tuesday it would cut the rediscount and relending rates by 25 basis points as of July 1, in a move to reduce funding costs for smaller firms and rural sectors.

China's factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures and ramped up support steps, a survey showed on Wednesday.

The gradual economic recovery will be the main theme in the second half of 2020, according to China Securities, which is likely to boost shares driven by the consumption pick-up.  

Shares of China's biggest liquor makers hit record highs, with Kweichow Moutai Co Ltd rising by 2.5 percent in the morning session to hit an all-time high. Shares in Chinese developers also gained on recovery hopes, with the CSI300 real estate index rallying 6.25 percent, marking its best session since February 14.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.33 percent while Japan's Nikkei index was down by 0.44 percent. The yuan was quoted at 7.064 per U.S. dollar, 0.01 percent firmer than the previous close of 7.065.

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