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1st LD-Writethru: Chinese shares rebound mildly on Thursday

Xinhua, July 16, 2015 Adjust font size:

Chinese shares rebounded mildly on Thursday after two days of declines as both cash and confidence were replenished by a government bailout.

The benchmark Shanghai Composite Index edged up 0.46 percent to close at 3,823.18, while the smaller Shenzhen Component Index gained 1.86 percent to close at 12,357.61.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, climbed 1.43 percent to end at 2,627.08.

The rebound was seen as a delayed market response to data released on Wednesday showing a better-than-forecast economic growth rate, and a signal that investors are gaining confidence.

China's GDP expanded by 7 percent in the second quarter of the year, surpassing a market forecast of around 6.9 percent.

Gao Xiang, an analyst with CITIC Securities, attributed the slight recovery to abundant liquidity following the government's measures to ensure capital inflow.

During the past two weeks, authorities poured in funds, slowed new share offerings, restricted futures trading of stock index and encouraged owners of listed firms to increase holdings.

But Gao said more time is needed for market confidence to be fully restored and that many investors are taking a wait-and-see attitude.

The cautiousness can be observed in the combined turnover of the two bourses, which contracted to 1.08 trillion yuan (176.55 billion U.S. dollars) from Wednesday's 1.25 trillion yuan.

Nevertheless, the market has scrambled out of the shadow of systemic risks that may spread to other sectors.

Global rating agency Moody's said in a report that the recent stock market turbulence will not have a major spillover effect on the economy, while another agency, Fitch, believes there is no systemic risk to China's real economy or financial system.

On Thursday, winners outnumbered losers by 663 to 257 in Shanghai, and by 854 to 321 in Shenzhen.

Companies in military industries performed best, with shares of some jumping by the daily limit of 10 percent. Insurers and banks were among the biggest losers. Endi