STOCKS ended higher yesterday, reversing all of their early plunge triggered by the coronavirus outbreak, as policymakers ramped up support for the economy and companies that have been hit by a slump in sales and activity.

At the close, the Shanghai Composite index was up 2.3 percent at 2,983.62, marking its largest daily percentage gain since last June. The blue-chip CSI300 index also rose 2.3 percent, its best daily performance in close to two weeks. Both indexes fully recouped the steep losses they suffered on the first trading day following the Lunar New Year break. Around US$700 billion in market capitalization was wiped out.

CSI300’s financial sector sub-index was higher by 2.3 percent, the consumer staples sector edged up 0.8 percent, the real estate index ended down 0.2 percent and the health-care sub-index closed 1.7 percent firmer.

On Friday, the China Securities Regulatory Commission (CSRC) loosened refinancing rules for listed firms by scrapping profitability requirements for private placements on Shenzhen’s startup board ChiNext. In additional, ChiNext-listed companies seeking public share sales no longer need to meet certain criteria around leverage ratios.

Meanwhile, companies are given more flexibility in pricing shares in private placements, while lockup periods for privately-issued shares are halved.

The ChiNext Composite index rallied 3.7 percent to touch a fresh three-year high, while Shenzhen shares ended 3.2 percent firmer.

Morgan Stanley analyst Laura Wang said in a note that the refinancing rule change, which boosted liquidity particularly for small- and medium-cap stocks, and the central’s supportive stance were among drivers behind yesterday’s rally.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.2 percent, while Japan’s Nikkei index closed down 0.7 percent.

So far this year, the Shanghai stock index is down 2.2 percent and the CSI300 dropped 0.5 percent. Shanghai stocks climbed 0.2 percent so far this month.

About 31.32 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 25.07 billion.

The Shanghai stock index is above its 50-day moving average and above its 200-day moving average.(SD-Agencies)