On September 7, the Chinese stock market closed higher, buoyed by news that financial institutions are increasing their capital. The Shanghai Composite Index rose 0.07% to 3,932.70, the Shenzhen Component Index climbed 1.91% to 13,774.91, and the ChiNext Index surged 3.41% to 3,398.68.
On September 6, the Chinese Ministry of Finance announced plans for an injection of 360 billion yuan (approximately $60 billion) into eight financial institutions. The institutions involved include the Industrial and Commercial Bank of China, Agricultural Bank of China, Export-Import Bank of China, China Export & Credit Insurance Corporation, China Life Insurance, Taikang Life Insurance, People's Insurance Company of China, and China Reinsurance Group. Chinese media interpreted this move as a measure to enhance the long-term capital supply capability of the stock market, beyond merely improving the financial structure of these institutions. The market particularly welcomed the capital increase for insurance companies, as Chinese authorities have been encouraging them to expand their investments in the stock market. According to Reuters, the stock holdings of Chinese insurance companies increased by 39% year-on-year to 5.7 trillion yuan. Thus, the capital increase by insurance companies has raised expectations for expanded stock investment capacity.
Additionally, the People's Bank of China conducted a 500 billion yuan reverse repurchase operation for three-month maturities on the same day, which was also seen as a positive development. Chinese media described this as a measure to stably absorb and replace liquidity maturing in September. It is also interpreted as a signal that the central bank aims to maintain stable liquidity in the market.
On this day, stocks related to optical modules (CPO) showed strong performance. Companies such as XunJieXing, QingShan Paper, and HuaShengChang hit their daily price limits. YinHe Securities stated, "The computational capacity for training large AI models continues to expand, and the high-speed optical module chain is likely to be the most directly benefited sector." Furthermore, the strong performance of the optical communication sector in the U.S. stock market last Friday also contributed to the positive sentiment in the Chinese market.
Grain stocks have also been rising consistently. Companies like YaSheng Group and Dunhuang Seed Industry reached their daily price limits. The World Meteorological Organization (WMO) predicted that the El Niño phenomenon would continue to strengthen, impacting global precipitation and temperature patterns significantly. Related weather risks are expected to persist until February 2027.
On this day, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7795 yuan, an increase of 0.0008 yuan from the previous day, reflecting a 0.01% decline in the yuan's value.
* This article has been translated by AI.
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