Chinese shares opened 1.39 percent higher on Thursday following the State Council (Cabinet)'s decision Wednesday to encourage commercial banks to grant more loans for stimulating economic growth and to stabilize the stock market.
The benchmark Shanghai Composite Index, which covers both A and B shares, rose 1.39 percent, or 27.31 points, to 1,992.72 at the opening.
The smaller Shenzhen index was up 1.16 percent, or 81.94 points, to open at 7,123.00 points.
Chinese shares also got a boost from a strong overnight rally on Wall Street, analysts said.
At an executive meeting presided over by Premier Wen Jiabao Wednesday, the Cabinet said nine measures would be taken to update the financial system, offer more loans for bolstering economic growth and raise the country's ability to ward against risks among financial institutions.
"The government would stabilize the stock market, promote the stable development of the futures market and give priority to the issue of bonds targeted at infrastructures, ecological and environmental projects and after-quake reconstructions," said the meeting.
Tang Yonggang, a senior analyst with domestic Hong Yuan Securities, said one layer of meaning in "to stabilize the stock market" was to brake the downward trend of the stock market.
The benchmark Shanghai Composite Index has shed more than 67 percent from its peak set at mid-October last year amid worries among investors fueled by the deepening global financial turmoil.
"The government's attitude to stabilize the market was very important to investors," Tang added.
Chinese equities surged 4.01 percent, or 75.78 points, to 1965.41 points on Wednesday, after China Securities Regulatory Commission chairman Shang Fulin said the regulator was considering allowing institutional investors to invest more in the equity market.
The banking sector, which had been sluggish for previous weeks due to financial crisis impact, boosted up the index after China Construction Bank(CCB) announced that the Central Huijin Investment Co., Ltd. had increased its CCB A-shares to 70.8 million by Nov. 28.
Source: Xinhua
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