Chinese stocks notch best day since August as officials calm worries about market, economy

Shanghai and Shenzhen indexes book their best gains in about two months, but are on pace for the steepest monthly losses since 2016

China’s main equity benchmarks on Friday produced their best daily gains since early August to end another ugly week on a high note, after Beijing officials offered apparently calming comments about the health of the economy following third-quarter gross domestic product that came in weaker than expected.

The Shanghai SHCOMP, +2.58% gained 2.6% to mark its best one-session rise since Aug. 7, according to FactSet data, while the small-capitalization Shenzhen Composite 399106, +2.58% also jumped 2.6%, representing its best session since Aug.9. Both indexes were down solidly to start Friday’s session.

For the week, however the Shanghai index marked its second straight weekly drop, falling 2.2%, At its current pace, the Shanghai is tracking its worst month, down 9.6%, since January of 2016 when it fell 23%. The Shenzhen, meanwhile, closed the week off 2.5%, logging its third consecutive weekly loss, while the stock gauge also is looking at its steepest weekly fall, off 12.3%, since the first month of 2016.

China’s GDP grew 6.5% from the same quarter a year earlier, down slightly from 6.7% growth in the previous quarter and off analysts’ expectations of a 6.6% growth. The pace was China’s worst since the first quarter of 2009. But investors were apparently heartened by statements from Chinese banking regulators to remain calm.

Vice Premier Liu said in an interview with the state-run Xinhua News Agency that Beijing values a healthy stock market, and financial regulators have recently announced new reform measures.

Liu said China attaches importance to the health of its stock market, and said U.S.-China trade clashes were affecting sentiment. “Frankly, the psychological impact is bigger than the actual impact,” he said.

Liu’s comments follow those from People’s Bank of China governor and banking and securities regulators, who all called on investors to maintain their composure. Guo Shuqing, the banking and insurance chief, said recent “abnormal fluctuations” in Chinese stock markets don’t reflect the country’s economic fundamentals and “stable financial system,” the Wall Street Journal reported.

Hong Kong stocks also enjoyed a rebound on the day, with the Hang Seng Index HSI, +0.42% closing 0.4% higher, after falling almost 1% earlier. The index fell 1% for the week, ringing up its fourth straight weekly loss. Tencent shares 0700, +0.36% gained 0.6%, sunny and Sunny Optical 2382, +1.03% finished the session up 0.8%, both stocks reversed earlier sharp declines.

Japan’s Nikkei NIK, -0.56% however, closed down 0.6%, as the machinery sector sank, with manufacturer Komatsu 6301, -3.12% shedding 3.1%. The Nikkei booked a weekly slide of 0.7%, its third straight. Meanwhile, in tech, Sharp Corp.’s stock fell by 3.4% 6753, -3.37% and those for Nintendo 7974, -3.96% fell 4% amid gains in the Japanese yen.

In other benchmarks, South Korea’s Kospi SEU, +0.37% rose 0.4%, Taiwan’s Taiex Y9999, -0.35% slid about 0.4%, Australia’s ASX 200 XJO, -0.05% receded 0.1%, while New Zealand’s benchmark NZ50GR, -1.22% closed 1.2% lower. Benchmark indexes in Singapore STI, -0.41% and Malaysia FBMKLCI, -0.48% both finished modestly lower.