Cash injection boosts China shares, but worries linger

On Thursday, Chinese stocks kept fluctuating, simultaneously reacting to downbeat sentiment that China’s government could pull back from its monetary stimulus and rising spirits regarding newly injected liquidity.  

The Shanghai Composite Index firstly edged down in the morning, but then headed for positive territory and last it surged 0,2%. As for the smaller Shenzhen Composite Index, it also acquired 0.5%. This early trading session definitely lacked the drama of Wednesday’s trade, when the Shanghai benchmark dipped 4.5%.        

The market still appears to be quite fixated on liquidity as well as the easing stance, as some financial analysts point out.  

On Thursday, the People’s Bank of China pumped up to 220 billion Yuan into the national financial system by simply purchasing seven-day short term loans, also dubbed reverse repurchase agreements. By the way, this week, China’s major bank has been injecting similar cash amounts with the only purpose to ease concerns regarding a short-term liquidity squeeze.   

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