China stocks have best week in 4 years

A Chinese investor smiles in front of a screen displaying shares at a stock brokerage house in Hangzhou city, East China's Zhejiang province, Nov 26, 2014.[Photo/IC]

 

BEIJING -- China's stock market closed out its best week in four years on Friday with a record turnovers.

Rate-sensitive shares including property firms, insurers and brokers continued an upward trend following last Friday's interest rate cut. News on the introduction of the long-awaited deposit insurance scheme pushed up bank shares Friday.

The benchmark Shanghai Composite Index soared 1.99 percent Friday to finish at 2,682.84 points. It continued a 6-day winning streak and closed 7.9 percent higher for the week, the best since mid-October 2010.

The smaller Shenzhen Component Index jumped 1.6 percent to finish at 9,002.23 points. It ended the week with an overall 8 percent gain.

Total turnover on the two bourses expanded to a new high of 710 billion yuan ($116 billion) on Friday from the previous day's trading of 619 billion yuan, thanks to positive market sentiment, new fund inflow into the market, and a large amount of funds returning to the market after unsuccessful subscriptions for new share offers.

China's stock market capitalization overtook Japan as the world's second largest after the United States, data from the two bourses showed after Thursday's close.

Analysts believed that the recent rally was mainly driven by the interest rate cut, which boost market liquidity.

Moreover, many institutions expected a cut in the reserve requirement ratio for some banks soon, which is expected to unleash more funds into the equity market.

Lin Caiyi, chief economist of the Guotai Jun'an Securities, said the Chinese economy now has the fundamentals to support a bull market.

Guotai Jun'an figures showed that 19 out of the 27 sectors that it tracked have seen profit improving, indicating marked progress in eliminating excessive production capacity.