FX.co ★ China Stocks Rebound After Sharp Selloff

The Shanghai Composite Index advanced by 1.24% to close at 3,813, while the Shenzhen Component Index soared 3.89% to reach 12,591 on Friday. This marked a robust recovery following the previous session's downturn triggered by regulatory apprehensions. On Thursday, reports emerged indicating that regulators were contemplating measures to temper the $1.2 trillion market rally that had commenced in early August. Proposed actions included easing restrictions on short-selling and increasing oversight of speculative trading to protect retail investors from significant losses. Adding further support, the People’s Bank of China announced its intention to inject 1 trillion yuan into the banking system via outright reverse repo operations, a strategy interpreted as an effort to stabilize the markets. The technology sector spearheaded the rally on Friday, with significant upticks observed in companies such as Zhongji Innolight (10.3%), Eoptolink Technology (11.9%), Victory Giant (20%), Cambricon Technologies (6.6%), and Sungrow Power (16.7%). Despite this recovery, both benchmark indices concluded the week with losses.