Last week’s Synocus China Update introduced the new policy to raise interest rate in China. The purpose for this higher interest rate is to divert money from investments to deposits, but Synoucs pointed out the influence could be uncertain.
Sept.15 was the first day for the new higher interest rate. However, Chinese share prices hit new high on Monday, Sept. 17.
The Shanghai Composite Index rose 109.21 points or 2.06 percent to 5,421.39 points. The Shenzhen Component Index was up 280.67 points or 1.54 percent to 18,494.38 points.
Steel stocks and power supply companies led the advance. The combined turnover on the two bourses reached around 256 billion yuan (34.1 billion U.S. dollars), a little higher than 234.5 billion yuan on previous trading day.
Monday's stock market was typical of the first trading day after the interest rate hike, said Zhang Gang, analyst with Southwest Securities.
One possible reason for the increasing stock prices is that many investors believe the Chinese stock market will remain stable until the 17th National Congress of the Communist Party of China, which is scheduled to convene in Beijing from Oct. 15.