For the week, CSI300 closed 2.3 per cent higher, while SSEC firmed 2.1 per cent.
Leading the pack on Friday, the CSI300 financials index and the CSI300 healthcare index rallied 3.3 per cent and 2.4 per cent, respectively.
Asian shares gained on Friday, as U.S. Fed officials allayed inflation fears.
“Investors hunt for bargains as the blue-chip CSI300 index approaches a key support level since mid-March, while gains in overseas markets also provide some solace,” said Zheng Zichun, an analyst with AVIC Securities.
Foreign investors came back on Friday, buying a net 11.7 billion yuan worth of A-shares via the Stock Connect linking mainland and Hong Kong, according to Refinitiv data.
Traders and analysts, however, remain cautious, as they believe inflation fears could lead to tight liquidity conditions.
“There are also no signs of monetary loosening, as Beijing continues to maintain a cautious policy stance,” Zheng said.
Chinese banks extended 1.47 trillion yuan ($228.46 billion) in new yuan loans in April, down from March and missing analysts’ expectations.
“Our risk control measures are more stringent this year, as we see no easy opportunities out there like those last year when liquidity was ample amid the coronavirus outbreak,” said Luo Yuxi, a Hubei-based fund manager at Langxin Investment.
Investors are also focused on the development of Sino-U.S. relations.
The United States needs new trade law tools to head off anti-competitive threats from China against key American high-technology industries, rather than reacting once harm is done, U.S. Trade Representative Katherine Tai said on Thursday. ($1 = 6.4345 Chinese yuan renminbi)
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