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Mainland stocks bounce back as dollar tumble eases yuan fears

Exhibitor News 2018-07-02

China stocks rebounded more than 1 percent on Thursday, led by resources shares as an overnight tumble in the US dollar eased concerns about yuan deprecation, at least temporarily.

The benchmark Shanghai Composite Index rose 1.53 percent to 2,781.02 points, while the Shenzhen Component Index finished the day up 1.60 percent at 9,793.07 points.

The CSI 300 Index of the biggest companies traded in Shanghai and Shenzhen, added 1.23 percent to 2,984.76 points.

The ChiNext Index, which tracks the country's NASDAQ-style board for growth enterprises, rose 1.73 percent to 2,126.64 points.

A total of 441.7 billion yuan ($67.13 billion) in shares changed hands on the Shanghai and Shenzhen exchanges on Thursday, up from 375.94 billion yuan on Wednesday.

Nonferrous metal stocks led the surge as an index tracking the sector rose nearly 5 percent on Thursday. Related stocks such as Huludao Zinc Industry Co, Chenzhou City Jingui Silver Industry Co and Yunnan Chihong Zinc & Germanium Co surged by the daily trading limit of 10 percent.

China's central bank set its official yuan midpoint at its highest since January 6, after the dollar index fell to its lowest level in three months.

Analysts said the dollar's tumble, as well as recent intervention by China's central bank, have eased fears of further yuan depreciation in the near term.

The mainland stock markets have showed signs of stability as the benchmark index has not repeatedly hit new lows, despite the recent turbulence.

But there has been no sign of large amounts of money entering equities, analysts said. This is because favorable government policies such as additional easing measures by the central bank have fallen short of market expectations.

On the whole, investors can be optimistic before the Chinese Lunar New Year holiday, which begins this weekend, but they should also be cautious about blindly buying stocks.