The Shenzhen Composite Index, which tracks stocks on China’s second exchange, ended up 3.76 percent, or 70.90 points, to 1,955.35 on turnover of 277.6 billion yuan.
On Thursday, the USA stocks rose as trading returned to normal at the New York Stock Exchange and Beijing’s efforts to halt a rout in Chinese stocks lifted markets around the world.
A hodgepodge of desperate measures has finally stopped the Chinese stock market’s monthlong spiral, which has generated a $3 trillion loss in share value since its mid-June peak.
“We are inclined to believe that Beijing will escalate policy responses until they start working”, said economists at Credit Suisse in a research note.
The government fanned the rally by sending encouraging signals through state media that enticed the Chinese public to pile in to the market.
Some analysts fear that the chaos in China’s market could prove to be more of a risk worldwide than the crisis now playing itself out in Greece and the U.S.is anxious that the stock market crash could jeopardize Beijing’s economic reform agenda.
“We are seeing the near term effect of the (central) government’s supportive measures”, said Conita Hung, a director at Hong Kong-based Amicus Asset Management.
WALL STREET: Major USA indexes fell on worries about China and the logjam in talks between Greece and its creditors.
A spokesperson for the China Securities Regulatory Commission called the bloodbath in Chinese stocks an “irrational sell-off”, but some called China’s markets a bubble this spring.
Hong Kong closed up 3.73 percent after the market recorded its biggest single-day loss for more than six years on Wednesday.
The CSRC, which warned on Wednesday of “panic sentiment” gripping a market dominated by ordinary retail investors, said it would deal severely with any shareholders who violated the restriction.
The prohibition is unlikely to have much impact on foreign investors. Broader S&P 500 futures jumped 0.8 percent to 2,054.70.
It has also been reported that major shareholders have been banned from selling stocks and that companies are being encouraged to support their share prices through buying back their own shares, as well as various other measures.
The Ministry of Security announced it will investigate anyone involved in “hostile” short selling – a type of stock dealing that is used to take advantage of a falling market.
This is not illegal in China, but Xinhua said authorities “were about to crack down on operations in violation of the law and regulations in a heavy-handed manner”. The smaller Shenzhen Composite is down around 40% over the same period. China’s economy has been slowing down.
Prices for iron ore – the raw ingredient for steel of which China is the largest buyer – plunged to at least a six-year lows early Thursday, with mining companies in resource-driven countries such as Australia and Brazil bearing the brunt.