New | Brokerage and insurance stocks power rebound in Chinese markets
State pension fund's share investment pledge prompts punters to return to market
The rebound in the mainland Chinese market on Tuesday was driven by brokerage and insurance stocks after the state-owned pension fund said late on Monday it would aim to invest 30 per cent of its assets in the domestic share market, a move that could provide a 1.3 trillion yuan boost for equities.
The key Shanghai Composite Index dropped as much as 5.1 per cent in the morning, before finishing up 5.53 per cent.
Nearly 300 stocks rose their daily limit of 10 per cent, with the gains of more than 1,300 stocks exceeding 5 per cent.
Leading brokerage Guotai Junan Securities gave the market a boost when it said it would lower margin requirements for certain blue chips.
All 24 brokerages and four insurance stocks in Shanghai rose more than 6 per cent. Changjiang Securities rose 10 per cent to 13.95 yuan, while Southwest Securities added 10 per cent to 19.65 yuan.
China Life Insurance rose 8.15 per cent to close at 31.32 yuan, while Ping An Insurance jumped 7.1 per cent to 81.94 yuan.
"The strong performance of the brokerage sector is likely directly related to the volatility in the market," said Gerry Alfonso, a director at Shenwan Hongyuan Securities. "If an investor has the view that the volatility is going to continue, then he might consider buying the stocks of brokers as they are likely to have larger trading volumes.
