SHARES in China rallied yesterday as investors cheered the government’s new blueprint for capital market reforms aimed at boosting regulatory transparency and widening market access.

    The benchmark Shanghai Composite Index ended up 2.07 percent at 2,052.87, its biggest daily percentage-point rise since March 21, when it added 2.72 percent. The index has lost a total of 3 percent since the start of the year, following a decline of 6.8 percent for the whole of last year. The Shenzhen Composite Index was 2.25 percent higher at 1,040.54.

    The State Council, China’s Cabinet, Friday unveiled a series of guiding principles for reforming the country’s financial markets. In a broad statement filled with ambitious goals and generalizations, the authorities pledged to establish a “multi-tier” capital market by 2020, encourage mixed corporate ownership and overhaul the nation’s malfunctioning system of initial public offerings (IPOs).

    “There was a bit of a euphoria [in the markets] triggered by the release of the new reform guidelines, coupled with expectations that the Chinese economy may be bottoming out in the current quarter,” said Zhang Gang, senior analyst at Central China Securities.

    However, most of the policy proposals were similar to those contained in a 20,000-word communique after the conclusion of the Third Plenum of the Communist Party six months ago, when China’s leaders rolled out their sweeping economic reform agenda for the next decade.

    “The release of the new guidelines shows how eager the government wanted to boost the sagging stock market. It may help lift confidence but there really aren’t that many noteworthy points in the document,” said Amy Lin, senior analyst at Capital Securities.

    If the current euphoria extends for two or more trading days, the market may be on a more solid footing and could even start a fresh and more sustainable rally, said Zhang. “But the problem is the new guidelines are about long-term policy goals, which take time to bear fruit. The short-term impact is likely limited,” he added.

    One immediate concern among most investors is the likely resumption of domestic IPOs, which could add to the supply of shares in the market and weigh on already fragile investor sentiment, Zhang said. (SD-Agencies)