China stocks find footing on rate cut, policy support hopes

Chinese stocks closed at a fresh one-month high on Thursday, boosted by a widely-expected cut in the benchmark prime lending rate and a slower rate of new coronavirus infections in the country.

** The Shanghai Composite index ended 1.8% higher at 3,030.15, its highest closing level since Jan. 22. ** The blue-chip CSI300 index rose 2.3%, hitting its highest level since Jan. 21 during the session, and marked the largest daily gain in more than two weeks. ** CSI300's financial sector sub-index rose 2.5%, the consumer staples sector gained 2% and healthcare shares climbed 1.3%.

** The smaller Shenzhen index and the start-up board ChiNext Composite index both jumped 2.2%. ** China cut the one-year loan prime rate by 10 basis points to 4.05% from 4.15%, while the five-year tenor was reduced by 5 basis points to 4.75%. ** "The latest LPR cut will help companies weather the damage from the coronavirus at the margins," Capital Economics said in a note, estimating that it will only trim average one-year bank lending by a maximum of 10 basis points.

** China's Hubei province reported a sharp drop in new infections after it stopped diagnosing people using chest X-rays and counted only those who tested positive for genetic traces of the coronavirus. ** The country's central bank in its quarterly report released on Wednesday said it sees limited economic impact from the virus, adding that it would extend credit, provide favorable loans or rates to firms involved in controlling the epidemic.

** Goldman Sachs said the PBOC is tilted towards more easing, noting that the central bank says it is now "prudent with appropriate flexibility" instead of just "prudent". ** "We found that in the past this shift represented a loosening bias, and average interbank interest rates tended to be lower when PBOC added "with appropriate flexibility"," they wrote in a note. ** Shares in affiliates of HNA Group surged following a report that China plans to take over the debt-laden conglomerate as the coronavirus has further hit its ability to meet financial obligations. ** Around the region, MSCI's Asia ex-Japan stock index fell 0.3%, while Japan's Nikkei index closed up 0.3%.

** So far this year, the Shanghai stock index is down 0.7% and the CSI300 has risen 1.2%. Shanghai stocks have risen 1.8% this month. ** About 34.57 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 31.51 billion.

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