Added liquidity pushes local stocks higher

Stock markets in Shanghai and Shenzhen notched impressive gains Thursday after the People's Bank of China (PBC) channeled a record dose of liquidity into the country's banking system to elevate short-term liquidity stresses as the third quarter draws to a close.

The Shanghai Composite Index tacked on 52.15 points, or 2.60 percent, to close at 2,056.32; while the Shenzhen Component Index jumped 3.57 percent, or 292.90 points, to end at 8,486.27.

The indices opened at odds Thursday but picked up steam in early trading as the heavily weighted finance, real estate, chemical and shipping sectors advanced. Securities, coal, gold, Internet, banking, machinery and cement stocks climbed higher in the afternoon following the PBC's injection of liquidity into the money market during its normal open market operations (OMO).

In total, the central bank injected a net 365 billion yuan ($57.89 billion) into the market via OMO moves Tuesday and Thursday this week, marking the largest weekly injection in the PBC's history.

According to analysts, confidence in the market got a major boost after an official from the China Securities Regulatory Commission (CSRC) was cited in the China Securities Journal as saying that listed firms should soon finish systems to give out dividends to their investors.

The China Insurance Regulator Commission (CIRC) also announced late Wednesday that it had given nine investment firms approval to tap into the Chinese equity market on behalf of local insurers. Sinolink Securities Co climbed by the daily limit to 14.37 yuan. Haitong Securities Co edged up 6.32 percent to 9.42 yuan Thursday.