SHANGHAI/HONG KONG, July 20 (Reuters) - China stocks rose 3%
on Monday, led by financial firms, after regulators moved to
bolster the market by lifting equity investment cap for insurers
and encouraging mergers and acquisitions among brokerages and
mutual fund houses.
** At the close, the Shanghai Composite index was up
3.11% at 3,314.15, while the blue-chip CSI300 index
ended up 2.98%.
** The start-up board ChiNext Composite index was
higher by 1.31%.
** Leading the gains, the CSI300 financials index
jumped 4.3% after the state regulator lifted equity
investment cap for insurers.
** China's banking and insurance regulator said it was
raising the cap on how much the country's insurers can invest in
equity assets, an effort trying to bring more long-term funds
into the capital market.
** "The raising of equity investment cap for insurers will
have an evident positive impact for the short term by bringing
fresh money into the stock market," said Zheng Zichun, an
analyst with AVIC Securities.
** Securities firms also gained, with the CSI SWS securities
index ending up 5.2%, as the regulator encouraged
M&As in the industry.
** "The rally in the stock market is something regulators
need, as it could reduce China's domestic social pressure given
the economic difficulties brought by the coronavirus outbreak,"
the analyst said.
** Monday's gains followed Shanghai shares' worst weekly
drop in five months as better-than-expected GDP data in China
fuelled worries over the pace of policy easing.
** The recent correction by Friday had wiped out nearly 3
trillion yuan ($429.13 billion) off the market capitalization of
Shanghai stocks, according to data from the Shanghai Stock
Exchange.
** Analysts, however, said the rally was yet to be over,
thanks to the country's economic recovery, continued policy
support and market reforms.
($1 = 6.9909 Chinese yuan)
(Reporting by Luoyan Liu, Noah Sin and Andrew Galbraith;
Editing by Subhranshu Sahu)