(Bloomberg) — China’s yuan strengthened and stocks rose on mainland exchanges in a positive start to the month for traders returning to work after an eight-day holiday.
The currency advanced 1.1% as of 9:53 a.m. in Shanghai, tracking recent moves in the offshore rate. The People’s Bank of China set its yuan fixing at 6.7796 per dollar on Friday — or slightly stronger than expected — suggesting it will continue to allow for currency gains after the yuan had its best quarter since 2008 versus the greenback.
“Markets will take any indication that the authorities are not too concerned about the level of the yuan as a positive sign,” said Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd. “In effect, not sending a signal is in itself a signal.”
The Shanghai Composite Index of stocks rose 1.4% and the CSI 300 Index climbed 1.7%. China’s $9.4 trillion onshore equity market last traded on Sept. 30.
Solar and technology stocks were among the biggest gainers in early trade. Longi Green Technology Co. surged 9.3% to hit a record high. Lens Technology Co. rose 7.4% and GoerTek Inc. added 6.3%.
“Stocks are getting a boost from the better-than-expected consumption data during the Golden Week holidays and a strong yuan,” said Daniel So, strategist at CMB International Securities Ltd. “Investors are looking forward to the Communist Party meeting toward month-end, before which market sentiment has usually been positive, as more stimulus policies are expected.”
China is unique among major economies to close its financial markets for long periods several times a year. In February, stocks were hit by a ferocious wave of selling and the yuan weakened past a key level against the dollar, as a rapidly