China stocks leap up following news of quadruple weighting

China stocks leaped up on Friday after index provider MSCI Inc announced they will quadruple weighting of China A-shares in their global indexes.

The benchmark Shanghai Composite Index soared 1.8 percent to 2,994.01 points. The smaller Shenzhen Component Index also shot up 1.5 percent to 9,167 points, and the bluechip CSI300 index posted a steep rise of 2.19 percent to close at 3,749.71 points.

The total turnover on Shanghai and Shenzhen bourses expanded slightly to 664.41 billion yuan from 662.29 billion yuan on Thursday.

The MSCI today announced they will quadruple the weight of China A-shares in their global indexes by quadrupling the inclusion factor from 5 percent to 20 percent in three steps starting in May, which will lead to a US$67 billion fund inflow to the A-share market this year, according to UBS Securities' estimate. 

Financial shares were among the biggest gainers. Insurance shares in general jumped 3.86 percent, the securities sector rose 3.58 percent and banks gained 3.28 percent, according to data from Wind Information.

Liquor stocks also performed strongly, with Wuliangye Yibin Co advancing 6.15 percent, and Shanxi Xinghuacun Fen Wine Factory Co and Jiangsu King’s Luck Brewery Joint-Stock Co both rising over 5 percent.

For the week, the Shanghai Composite Index had a tremendous run-up of 6.77 percent to become the eighth consecutive week of gains.

"China's stock market recovered in the first two months of 2019 as investors widely expected positive results from the Sino-US trade talks, and good expectations for trade negotiations have effectively stabilized market sentiment," said Catherine Yeung, director of international equity investment at Fidelity.

"At the same time, the Chinese government has continued to take measures to promote corporate financing and enhance the vitality of the domestic economy," Yeung added.