Chinese shares in biggest rally since 2008 – Fidelity: “Worst is over”

(Bloomberg) — Chinese stocks rallied, sending the benchmark index toward its biggest two-day gain since 2008, as a flurry of government measures to stem an equity rout started to take effect.

The Shanghai Composite Index surged 6.1 percent to 3,934.13 at 11:03 a.m., adding to Thursday's 5.8 percent surge, as health-care, industrial and consumer companies advanced. Only one stocks fell on the benchmark gauge with about 49 percent of companies on mainland exchanges still halted from trading on Friday, down slightly from the previous day.

Officials have unveiled market-boosting measures almost every night over the past two weeks to shore up a stock market that lost $3.9 trillion in less than a month. Some of the biggest fund managers are getting bullish, with Fidelity Investments, which oversees the largest China funds outside of the mainland, saying that Chinese stocks are now a buy.

"The worst is over and that should be the end of the correction now, thanks to all these government support measures," said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai. "The market is probably at the bottom in the medium term as the economic scenario and the loose monetary policies remain unchanged."

The Shanghai Composite has risen 6.8 percent this week, set to end three weeks of declines. The CSI 300 Index rose 6.7 percent for a two-day, 14 percent rally. Hong Kong's Hang Seng China Enterprises Index advanced 4.6 percent, while the Hang Seng Index gained 2.3 percent.

Currently 1,422 companies on the mainland's exchanges are suspended from trading, down from 1,439 at the close of trade Thursday. Trading halts are equivalent to 49 percent of total listings, compared with 50 percent on Thursday.

In the latest effort to stem losses, the securities regulator suspended reviews of initial public offerings and other share sales, people familiar with the matter said. This week, China banned major stockholders from selling stakes in listed companies and announced that banks can roll over loans backed by shares. Over the past month, the government has also cut interest rates and halted IPOs, while a group of 21 brokerages set up a 120 billion yuan ($19.3 billion) fund to support stocks.