China blue-chips leap most in 9 months

China stocks rose sharply yesterday, as the blue-chip CSI300 index posted its best day in more than nine months despite the surprise decision by Moody’s to downgrade the country’s sovereign credit rating a day earlier.Traders cited growing hopes that global index provider MSCI Inc would add mainland Chinese shares to its benchmark next month, and some also hinted that state-directed buying might have helped prop up the market.One stock analyst at a Chinese securities company said there was “national will” yesterday for the market to go up.The blue-chip CSI300 index rose 1.8%, its biggest gain since August 15, and ended at 3,485.66 points, its highest close in more than a month.The Shanghai Composite Index advanced 1.4% to 3,107.83 points.Chinese stocks also rose a touch on Wednesday after Moody’s clipped China’s credit rating by one notch, prompting official criticism.The strongest performers in China’s markets yesterday were banking and real estate stocks, whose indexes jumped 3.3% and 4%, respectively.The SSE 50 – dubbed China’s “Nifty Fifty” index – leaped 2.7% to close at a near 17-month high. Meanwhile, China’s Nasdaq-style board ChiNext inched up 0.1%, reversing earlier losses to follow the broader market higher. State intervention in financial markets is not unheard of in China. During the market rout of mid-2015, a band of government-backed investors, dubbed the “National Team”, was ordered to try to stop the bleeding by buying stocks.There was some speculation online that the National Team was at it again in the wake of the downgrade. Stirring memories of the government-orchestrated campaign in 2015 to prop up stocks, 20 companies said late on Wednesday that their major shareholders planned to increase their holdings, the state-owned newspaper Securities Times reported.In the foreign exchange market yesterday, traders said they saw major state-owned banks selling dollars, which helped push the yuan to a near-two month high against the dollar.Expectations were building that MSCI will announce China’s inclusion in its Emerging Markets Index when it issues its annual classification review on June 20. Snubbing China last year, MSCI cited concerns over share suspension rules and monthly limits on repatriating capital.China Securities Co, a brokerage, said in a report on Wednesday: “The chance of an A-share inclusion into MSCI has risen drastically for 2017.”The brokerage encouraged continued buying of leading blue-chips, which have already outperformed small-caps this year.