China’s Shanghai Composite Sees Highest Daily Spike Since 2016

The Shanghai Composite, one of China’s leading stock indexes, has seen its highest daily spike in more than two years following signs that the government will step in to support battered equity markets.

It closed up 4.1%, its biggest one-day rise since March 2016.

The moves extend a rally that began on October 19 and after investor confidence surged on assurances from Beijing.

Stocks had been falling as China’s economic growth continued to stutter.

On October 19, top Chinese financial officials – including economic adviser Liu He and the heads of the securities and insurance commissions – issued a statement to buoy investor sentiment in bruised markets.

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Over the weekend, the Chinese government published a draft of new rules for personal tax deductions, Reuters reports.

The moves come as China, the world’s second largest economy, faces challenges such as high debt levels and an intensifying trade war with the US.

The October 19 data showed that in Q3 2018, China’s economy grew at the lowest rate since global financial crisis, expanding by 6.5% from a year earlier.

The rate was a drop from the 6.7% pace in the prior quarter, but remains in line with the government’s full-year target of about 6.5%.

For years China has pushed to wean its economy off exports and rely more on domestic consumption for growth.

At the same time, the Chinese government has been fighting to contain ballooning debt driven by a wave of infrastructure development and a housing bubble without hurting growth.

In recent months the government has taken steps to support China’s economy, including cutting capital requirements to boost liquidity and ease the slowdown.