Stocks get boost from upbeat outlook
Chinese mainland stocks closed higher on Wednesday after upbeat comments from the central bank governor and listed companies' positive measures to purchase shares.
The benchmark Shanghai Composite Index, which tumbled to a two-year low on Tuesday, climbed by 0.27 percent to 2915.73 on Wednesday. The Shenzhen Component Index increased by 0.92 percent, and the ChiNext startup index rose by 1.08 percent.
Liquor stocks led the increase with Beijing Shunxin Agriculture Co Ltd and Anhui Golden Seed Winery Co Ltd both climbing by 7.7 percent. Hebei Hengshui Laobaigan Liquor Co Ltd and Xinjiang Yilite Industry Co Ltd both increased by more than 6 percent.
Yi Gang, governor of the People's Bank of China, said the nation's economic fundamentals are good and the economy is well-placed to cope with external shocks, according to a statement released by the central bank on Tuesday night.
"The stock market fluctuation on Tuesday was mainly influenced by investors' emotions," Yi said.
More than 30 A-share listed companies released their share purchase plans on Tuesday to shore up investor confidence.
For example, CMST Development Co Ltd released a statement on Tuesday night that its controlling shareholder China National Material Storage and Transportation Corp purchased stakes totaling about 40 million yuan ($6.18 million) on Tuesday and will continue to increase its stake over the next six months.
"The central bank governor's comment and listed companies' efforts may play a role in calming the market panic, but I believe today's recovery is a technical adjustment," said Dong Dengxin, a finance professor at Wuhan University of Science and Technology.
Analysts said after Tuesday's panic selling, investors still believe the US and China will work out their differences.
"From an economic perspective, a trade war would be a 'lose-lose scenario' and negotiation is the preferred approach to reach a 'win-win' outcome", said Zhu Haibin, chief China economist and head of China equity strategy at JPMorgan. "Investors believe there is still room for negotiation between the two sides."
