Chinese stocks surge for seven days

Chinese investors talk as they look at prices of shares at a stock brokerage house in Fuyang city, East China's Anhui province, Nov 28,?2014. [Photo/IC]

China's A shares have rallied for a seventh day amid a slide in oil prices, expectations over the introduction of a deposit insurance system and a cut in reserve ratios.

The benchmark Shanghai Composite Index (SCI) climbed 1.99 percent to 2,682.84 on Friday, while Shenzhen Component Index closed at 9,002.23, up 1.6 percent.

The SCI has advanced about 10.9 percent this week and 26.9 percent so far this year, heading for the biggest annual gain since 2009.

Transport companies led the gain on Friday after the price of crude oil plummeted to a four-year low. Air China, China Eastern Airlines, Southern Airlines and Hainan Air soared by the daily limit of 10 percent. China Cosco Holdings and China Merchants Shipping jumped 9.43 and 7.35 percent respectively.

According to Bloomberg, West Texas Intermediate oil was trading at $68.78 a barrel in Tokyo, down 6.7 percent, and headed for its worst week since May 2011. The OPEC refrained from cutting output to ease a supply glut.

The banking sector remained bullish after the unexpected rate cut over the weekend, as Citic Bank, China Everbright Bank, Huaxia Bank, and Bank of Communication climbed 10 percent on Friday.

Industry regulators are expected to introduce a deposit insurance system starting from January next year, said Founder Security in its research report, adding that the policy is essential in interest rate liberalization.

Bloomberg reports that the market is also expecting the People's Bank of China to cut reserve requirement ratios, a move that may further improve market liquidity.

China's central bank has reduced the one-year lending rate by 40 basis points to 5.6 percent, and the one-year deposit rate by 25 basis points to 2.75 percent, according to an announcement on Nov 21.

The CSI 300 Index advanced 1.97 percent to 2,808.82.