China stocks were steady on Monday, as investors cheered the government’s plan to look into banning petrol fuel cars while new central bank policies apparently aimed at taming rapid gains in the yuan were also in focus.
The blue-chip CSI300 index was unchanged at 3,825.65 points, while the Shanghai Composite Index added 0.3 per cent to 3,376.42 points.
China’s new-energy auto firms saw shares surge, extending recent strong gains, after a government official said over the weekend that China had begun looking at a ban on traditional petrol-engine cars.
New-energy vehicle
An index tracking new-energy vehicle makers shot up 5.6 per cent to record high since its launch in early 2016, having gained more than 20 per cent this year.
Much attention was on central bank moves to rein in the yuan’s recent strength. China’s central bank on Monday said it had removed reserve requirements for financial institutions settling foreign exchange forward yuan positions and those for offshore yuan deposits in China at foreign institutions.
Analysts interpreted it as a signal the PBOC doesn’t want to see the yuan appreciate too quickly against the dollar. A strong yuan would benefit sectors such as banking, real estate and airlines, but hurt exporters.
Investors are also assessing the sustainability of China’s economic recovery, after data showed government spending rose at its slowest monthly pace in 10 months in August.
China has pledged a pro-active fiscal policy to support the economy, and analysts have credited Beijing’s pump-priming as one of the key factors underpinning solid growth this year.
Sector performance was mixed. Gains were led by material firms, while real estate companies weighed.
China Molybdenum, one of the country’s largest molybdenum and tungsten producers, and maximum allowed 9.9 per cent to a record high, as investors expect the minor metals maker to benefit from the country’s future ban on petrol cars.
The firm has gained 130 per cent this year.
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