SHARES rose more than 3 percent yesterday after last week’s steep losses, as bleak economic data fuelled hopes the government would roll out more measures to support the world’s second largest economy, while a decline in new coronavirus cases also helped sentiment.

Infrastructure and real estate stocks led the bounce-back, with Shanghai shares up 3.2 percent, its biggest since late March 2019, while the blue-chip CSI300 index rallied 3.3 percent, its best since last May.

On Friday, fears that the fast-spreading coronavirus cases outside of China could turn into a pandemic, had sent global equity markets tumbling. Last week, both the indexes dropped 5 percent.

Data released over the weekend showed China’s factory activity contracted at the fastest pace ever in February, even worse than during the global financial crisis, highlighting the colossal damage from the virus outbreak.

A private survey released yesterday showed the epidemic triggered the sharpest contraction in factory activity on record.

Real estate and infrastructure stocks, sensitive to China’s stimulus package as they had been used to provide a floor to the economy in the past, shined yesterday, with China Railway Construction Corp. advancing by the 10 percent daily limit and Anhui Conch Cement rising to a record. Cement maker BBMG Group, Beijing New Building Materials and China Communications Construction Co. also surged by as much as 10 percent.

Infrastructure stocks, which have an advantage in terms of low valuations and absolute prices, rallied as investors expected China’s policy support to hedge the virus impact on the economy, said Wang Mingli, executive director of Youpu Investment, a Shanghai-based private equity fund.

From a long-term perspective, the A share market is worth investing, given China’s increasing comprehensive strength, which could be seen in its better control of the outbreak than any other countries, Wang said.

Chinese policymakers have implemented a raft of measures to support the economy jolted by the outbreak that is expected to have an impact on the first-quarter growth.

Foreign investors, seen as a key player as China further opens up its capital markets, came back after six sessions of net selling, purchasing nearly 7 billion yuan worth of A shares.

(SD-Agencies)