China stocks rally as tech, financial firms shine

Credit: REUTERS/CHINA STRINGER NETWORK

China stocks rallied on Monday as Beijing showed support for its capital markets by relaxing margin financing, while demand for tech stocks also boosted the indexes.

SSEC 1.5%, CSI300 1.8%, HSI 0.1%

HK->Shanghai Connect daily quota used 1.4%, Shanghai->HK daily quota used 3.9%

FTSE China A50 +1.9%

SHANGHAI, Aug 12 (Reuters) - China stocks rallied on Monday as Beijing showed support for its capital markets by relaxing margin financing, while demand for tech stocks also boosted the indexes.

** The blue-chip CSI300 index .CSI300 rose 1.8%, to 3,699.10, while the Shanghai Composite Index .SSEC gained 1.5% to 2,814.99.

** The CSI IT index .CSIINT and the CSI all shares telecoms services index .CSI000994, key gauges of the country's tech sector, leapt 4.2% and 3.2%, respectively.

** The surge in tech stocks came after Huawei Technologies HWT.UL unveiled on Friday its proprietary operating system for smartphones and other devices, as U.S. trade restrictions imposed in May threaten to cut the Chinese firm's access to U.S. technologies such as Android.

** Highlighting investor demand for tech plays, shares of Shenzhen Chipscreen Biosciences opened at 125 yuan, over six times its IPO price of 20.43 yuan, on their trading debut on the Shanghai Star board. The stock closed up 366.5% for the day.

** The rally was also aided by financial stocks, particularly securities shares, which rallied as the securities watchdog relaxed margin financing rules.

** "With the new rules released, along with the CSRC's relaxation on asset restructuring and backdoor listings announced in June, we expect more active trading in A-shares, especially for the smaller-cap stocks newly included," analysts with Morgan Stanley said in a note.

** Meanwhile, U.S. President Donald Trump on Friday said he was not ready to make a deal with China and even called the September round of trade talks into question, reviving concerns on financial markets that the bilateral dispute is unlikely to end anytime soon.

** Overall, there are more opportunities than risks in the A-share market despite various external challenges including Sino-U.S. trade war, China Merchants Securities noted in report.

** China's exports maintained positive growth, indicating the impact on the country's exports and manufacturing industry from the ongoing trade spat was not that significant as imagined before, while valuations of A-shares were around historic lows, the brokerage added.

** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 0.03%, while Japan's Nikkei index .N225 closed up 0.44%.

** At 07:16 GMT, the yuan CNY=CFXS was quoted at 7.0644 per U.S. dollar, 0.04% weaker than the previous close of 7.0615.

** About 13.16 billion shares were traded on the Shanghai exchange, roughly 80.6% of the market's 30-day moving average of 16.33 billion shares a day. The volume in the previous trading session was 14.82 billion.

** As of 07:17 GMT, China's A-shares were trading at a premium of 30.47% over the Hong Kong-listed H-shares.

(Reporting by Shanghai Newsroom; editing by Uttaresh.V)

((luoyan.liu@thomsonreuters.com; Reuters Messaging: luoyan.liu.thomsonreuters.com@reuters.net))

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