PBoC Official Says China Stock Market Correction ‘Almost Over’

The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 87 basis points to 6.3406 against the US dollar on Monday, according to the China Foreign Exchange Trading System.

The yuan CNY=CFXS rose to its highest levels since its surprise devaluation on August 11 sent shock waves through global markets, with investors fearing the worst for an economy that for years has been the growth engine of the world. Investors are hoping for the implementation of additional stimulus measures when Beijing meets later this month to discuss the 13th five-year plan.

The central bank said on Saturday that China will step up its crackdown on illegal cross-border money transfers conducted by underground money dealers and offshore companies.

“The policy may not immediately inject a lot of liquidity into the economy, but it has boosted expectations of monetary easing”, said Wu Kan, head of equity trading at Shanghai-based investment firm Shanshan Finance.

The market capitalisation of the 163 stocks in the China CleanTech Index is RMB 1.8 trillion (US$276 billion). “There will be ups and downs, but not the kind of panic selling we saw earlier”, he said, referring to the mid-June rout that knocked headline indexes down more than 30 percent in just several weeks. Markets in South Korea and Taiwan were closed for holidays on Friday.

While the result was likely achieved because President Xi Jinping, Premier Li Keqiang and People’s Bank of China Governor Zhou Xiaochuan reiterated that the country had no intention to start a currency war and because of government intervention conducted through state-owned banks, it still showed Beijing’s determination in pushing through the reforms. He was quoted in official media as saying the stock market correction was “almost over”. New Zealand’s S&P/NZX 50 Index rose 0.2 percent.

Asian stocks rose, with the regional benchmark index heading for its biggest weekly advance since December 2011, as USA shares rallied after minutes from the US Federal Reserve’s latest meeting indicated the central bank will not rush to raise interest rates.