Chinese brokerages are extending the window for bank-securities transfers, following the Shanghai Stock Exchange's decision to add an extra five minutes as part of efforts to facilitate stock trading amid a market boom driven by Beijing's historic stimulus package.
Top securities firms including Citic Securities and Huatai Securities told their clients on Monday that they have coordinated with banks to allow for earlier transfers of funds from bank accounts to brokerage accounts, aiming to help investors trade stocks promptly following the market's reopening after the week-long national holiday.
On Sunday, the Shanghai Stock Exchange said that it would extend the period for designated transactions by an additional five minutes, from 9.25am to 9.30am on each trading day, to allow more investors to participate in the stock market. Previously, the window for designated transactions was from 9.15am to 9.25am, and from 1pm to 3pm.
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Designated transactions is a procedure specific to the Shanghai Stock Exchange. When a retail investor opens an account with a brokerage firm, the individual has to tell the stock exchange that it has designated said brokerage firm to help them buy stocks. The move will impact people opening new brokerage accounts and those switching brokerage firms.
Both the Shanghai and Shenzhen exchanges conducted drills on Monday to prepare for the expected surge in market activity, aiming to prevent technical issues and system vulnerabilities.
The A-share market recorded a turnover of 1 trillion yuan (US$141.7 billion) within 20 minutes of opening on Tuesday, the most since September 30, according to local media reports.
Chinese stocks surged to catch up with gains made in Hong Kong during the trading break. The CSI 300 Index, which tracks the largest companies listed in Shanghai and Shenzhen, jumped 10.8 per cent, its largest opening on record. The Shanghai Composite Index surged 10.1 per cent, while the Shenzhen Composite Index soared 12.9 per cent. The mainland stock indices pared gains later.
"Expanding the time window for designated transactions can better meet the trading needs of investors and reduce the likelihood of system malfunctions," said Shen Meng, director at Beijing-based investment bank Chanson & Co.
In the last week of September, China surprised the world with a policy bazooka aimed at ending a protracted property market slump and reviving the economy.
The stimulus package, estimated to be around 7.5 trillion yuan (US$1.06 trillion), includes a 2.5 trillion yuan reduction in mortgage-debt servicing and two new 800 billion yuan facilities for the stock market.
Beijing also pledged additional fiscal support, including 2 trillion yuan in bond issuance to stimulate consumption and 1 trillion yuan in capital for state lenders, following the Politburo meeting on September 26.
Wall Street is rushing to keep pace after Beijing's unexpected wave of stimulus triggered a bull run in the Hong Kong and mainland China stock markets. Goldman Sachs became the latest bank to tout the impact of the rescue package, upgrading its outlook on Chinese stocks to "overweight".
The bank's strategists, including Tim Moe, said in a note to clients last week that gauges tracking Chinese equities could rise by an additional 15 to 20 per cent.
On Monday, Morgan Stanley also projected that Chinese stocks could gain at least another 10 per cent in a tactical rally in the near term, driven by Beijing's policy support, while Nomura raised its year-end target for the MSCI China Index to 65 from 59.
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