SHANGHAI, (Reuters) – Chinese stocks rose strongly for a second day on Friday, buoyed by a barrage of government support measures, but worries persist about the long-term impact that four weeks of stock market turmoil may have on the world’s second-largest economy.
Over the past two weeks Chinese authorities have cut interest rates, suspended initial public offerings, relaxed margin lending and collateral rules and enlisted brokerages to buy stocks, backed by cash from the central bank.
Some analysts predict further moves to come from the central bank, which often makes policy announcements over the weekend, such as another rate cut or relaxation of the amount of cash banks must hold as reserves.
The frantic efforts to stem the market slide finally began to gain traction on Thursday, when shares rose around 6 percent after the securities regulator banned shareholders with large stakes in listed firms from selling.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose another 6 percent on Friday, while the Shanghai Composite Index gained 5.4 percent.
At the depths of their slump earlier this week Chinese shares had fallen more than 30 percent from their mid-June peak, and for some global investors China’s market turmoil had become a greater concern than the crisis in Greece.
Analysts at Bank of America Merrill Lynch said in a research note they expected the ripple effect to eventually hit the real economy and corporate earnings.
