Markets rally on debt-equity swap news 
2019-07-31
Chinese stocks rebounded yesterday with strong gains in shares related to debt-for-equity swaps, as authorities issued a guideline on reducing the enterprise leverage ratios.
The Shanghai Composite Index rose 0.39 percent to 2,952.34 points. The smaller Shenzhen Component Index also gained 0.48 percent to 9,399.1 points, while the blue-chip CSI300 index closed 0.42 percent higher at 3,870.32 points.
Turnover on the two major bourses of Shanghai and Shenzhen was a combined 384.24 billion yuan (US$55.83 billion) compared with the previous session’s 343.74 billion yuan.
Stocks of 40 companies listed on the A-share markets hit the daily limit of 10 percent. Shares related to debt-for-equity swaps led the gains, as China’s top economic authorities announced support for financial institutions to conduct market-oriented debt-for-equity swaps in qualified private enterprises.
On Monday, the National Development and Reform Commission, the People’s Bank of China, the Ministry of Finance and the China Banking and Insurance Regulatory Commission released joint guidelines saying that the country will strengthen the pivotal role of financial asset investment firms in the swap program, encourage the participation of social capital and accelerate asset transactions.
Non-bank financial shares, the media sector and non-ferrous metal firms also rallied.
