Chinese Stock Market Ends Mixed Despite Stimulus Measures... Shanghai Up 1.3%, Shenzhen Down 0.4%

Rising Start on News of 95 Trillion Won Scale SFISF Opening

China's stock market closed mixed despite the central bank, the People's Bank of China, implementing measures to support the market.

People's Bank of China
Photo by Yonhap News

According to Bloomberg on the 10th, the Shanghai Composite Index started the day with a 0.6% gain and closed at 3301.93, up 1.32% from the previous trading day, while the Shenzhen Composite Index closed down 0.37% at 1910.27.

The CSI 300 Index, composed of the top 300 stocks by market capitalization on the Shanghai and Shenzhen stock exchanges, closed up 1.06%.

On the same day, the terms of the merger and acquisition between Guotai Junan and Haitong Securities were disclosed, causing the stock prices of both companies on the Shanghai stock market to soar up to 10%. If the two securities firms merge, their asset size will reach 1.6 trillion yuan (approximately 301 trillion won), surpassing CITIC Securities to become the largest securities firm in China.

The push to create a mega securities firm through mergers and acquisitions is analyzed as reflecting the Chinese government's determination to actively compete with global financial firms, including Wall Street investment banks.

The Hong Kong Hang Seng Index closed up 3.07%.

Reuters reported that following the announcement of the People's Bank of China's establishment of the Securities, Fund, and Insurance Company Swap Facility (SFISF), the Chinese stock market started the day on an upward trend.

Financial institutions can provide CSI 300 constituent stocks and other assets as collateral under this program to exchange for high-quality liquid assets such as government bonds and bills from the People's Bank of China. The initial operating scale is 500 billion yuan (approximately 95 trillion won), with the possibility of expansion depending on circumstances.

However, as the effect of the market support measures waned over time, profit-taking sales emerged, causing the Shenzhen stock market to lose momentum.