Chinese shares surge as liquidity strain worries ease
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Chinese stocks Wednesday posted a strong rally, extending the gains of the previous day, as investor worry over a liquidity crunch in June eased due to recent central bank moves.

The benchmark Shanghai Composite Index gained 1.23 percent to close at 3,140.32 points. It marked the largest daily gain since May 25 when the index advanced 1.43 percent.

The Shenzhen Component Index jumped 1.96 percent to 10,109.88 points.The ChiNext Index, China's NASDAQ-style board, rose 1.89 percent to close at 1,799.85 points.

Total turnover on the two bourses expanded sharply to 455.8 billion yuan (67.2 billion U.S. dollars) on Wednesday from 297.8 billion yuan the previous day.

Investors drew solace from the recent string of open market operations by the Chinese central bank to ease market worries over tightening liquidity, and their risk appetite was regained, according to Sun Xiwei, chief investment strategist at CITIC Securities.

Liquidity refers to the amount of capital available on the market and how easily it can be used. The abundance of liquidity has wide implications on the stock, bond, housing and other markets.

China's central bank Monday injected 30 billion yuan into the financial system through 28-day reverse repos. On Tuesday it injected 498 billion yuan into the financial system via the medium-term lending facility, with the loans to mature in one year.

"The moves sent a clear signal to keep liquidity basically stable by providing medium and long-term funds to help the banking system through the mid-year stress," said Li Qilin, a senior analyst with Lianxun Securities.

"Judging from the recent policy action of the central bank, a liquidity crunch is not likely to emerge," said Ming Ming, a senior analyst with CITIC Securities.

Stocks rose across the board, with liquor makers, environmental protection companies and shares related to Xiongan New Area, a new economic zone to be built near Beijing, among the biggest gainers.

Kweichow Moutai, a renowned Chinese liquor brand, gained 2.35 percent to close at 459.37 yuan, and Beijing Hanjian Heshan Pipeline surged by the daily limit of 10 percent to 26.9 yuan. Top Resource Conservation and Environment rose 5.01 percent to at 11.11 yuan.

Sun predicted that the stock rally might continue in the following days. Enditem

Author： 　　　Source：xinhua　　　 Editor：Yang Fan