Chinese stocks jump on finance easing; other markets subdued

HONG KONG – Chinese stocks outperformed their counterparts around the world Monday after authorities loosened controls on brokerages lending money to investors for share buying. Trading elsewhere was muted ahead of the looming long Eastern weekend in many countries.

KEEPING SCORE: European stock markets were mixed but trading within fairly narrow ranges. Germany’s DAX was up 0.5 per cent at 10,000 but France’s CAC 40 fell 0.2 per cent to 4,454. Britain’s FTSE 100 was more or less unchanged at 6,188. U.S. stocks were poised to open marginally higher, with Dow futures up and the broader &P 500 futures up 0.1 per cent.

CHINA FOCUS: The Shanghai Composite Index in mainland China soared 2.2 per cent to close at 3,018.80 in the wake of Friday’s announcement from China Securities Finance Corp. that it would resume providing financing to stock brokerages lending money to investors. The move is seen as providing support for the country’s fluctuating markets. The state-owned institution said it would provide margin financing again for four different loan periods of up to 91 days, according to a statement that was no longer available on its website but circulated widely on Chinese media. It also started publishing interest rates for the loans on its websites and lowered the rate for a longer-term loan. Beijing had tightened limits late last year on margin financing as it wound down emergency measures aimed at halting a market meltdown that began last June.

ANALYST VIEW: “They had restricted financing for a while, and now they’re relaxing the rules, which is good, because recently Chinese market turnover had been on the low side for a very long time,” said Jackson Wong, associate director at Huarong International Securities. “By relaxing rules, that would definitely boost the sentiment, the turnover.”

GLOBAL OUTLOOK: Investors will also be mulling the outlook for the U.S. economy this week after officials at the Federal Reserve said last week that they would slow the rate of interest rate increases this year because of concerns about the global economy.

WIND DOWN TO EASTER: Trading in many major markets is expected to be quieter than usual this week as trading is curtailed by the long Easter weekend in many countries.

ASIA’S DAY: South Korea’s benchmark Kospi index slipped 0.1 per cent to end at 1,989.76, while Hong Kong’s Hang Seng index was up 0.1 per cent to 20,684.15. Australia’s S&P/ASX 200 dipped 0.3 per cent to 5,166.50. Markets in Japan were closed for a holiday.

ENERGY: Trading was fairly tepid in energy markets. The benchmark U.S. crude rate was down 9 cents at $41.05 a barrel, while Brent crude, the benchmark for international oils, was up 10 cents at $41.30 a barrel in London.

CURRENCIES: It was similarly quiet in the currency markets. The euro was flat at $1.1271 while the dollar was steady at 111.52 yen.