Chinese stocks rally most in weeks as banks, telecoms lead

China stocks rallied, after the central bank’s decision to inject cash into the financial system alleviated concerns that officials would hold back on stimulus.

The CSI 300 Index jumped 2.8 percent yesterday, its biggest gain in more than two weeks, while the Shanghai Composite Index added 2.4 percent. The Hang Seng China Enterprises Index closed at a level that denotes a bull market after failing to hold that milestone earlier this month. Banks surged as the People’s Bank of China added funds to the money market after an 18-day dry spell.

Stocks sold off Monday as traders pared back their bets of additional stimulus, following data last week that showed the economy is improving. The resumption of cash injections by the People’s Bank of China is seen as a positive signal, said Castor Pang, research head at Core Pacific-Yamachi International.

“The central bank’s resumption of net injections today alleviated earlier concerns of tightening liquidity,” said Ken Chen, a Shanghai-based analyst with KGI Securities Co. “Positive expectations on March economic numbers due tomorrow are also supporting the blue chips, which are more sensitive to changes in fundamentals.”

The Bank of Guiyang Co. rose by the 10 percent limit and Industrial Bank Co. added 7.5 percent. China Construction Bank Corp. rose 4.9 percent in Shanghai.

Telecom stocks were also among the biggest gainers yesterday amid signs China is getting serious about developing its next-generation networks. A gauge tracking the industry group surged 6.9 percent, following news that state-owned firms increased their 5G investments by nearly 40 percent in the first quarter. ZTE Corp rose by its daily limit onshore, while FIH Mobile Ltd. jumped 15 percent in Hong Kong. Bloomberg