Following an uncertain beginning, the Shanghai Composite has closed up 0.2% and ended a run of nine consecutive sessions of losses, its longest losing streak since 1994. The Hang Seng finished +0.6%.
Chinese shares rose despite another spike in short-term interest rates, which had hurt stocks last week. Even though the People's Bank of China provided a further emergency injection of money on Friday, the seven-day repurchase rate was 73 bps higher at 8.94% as of the midafternoon after touching 9.8% at one stage. That's the highest level since the liquidity crunch in June.
However, market watchers say that the increase in money market rates is due to seasonal factors, which might help account for the small recovery in stocks today.
Prior to its emergency provisions of liquidity, the PBOC had refrained from injecting money into the system as it looked - and still does - to rein in soaring debt in China. This has been highlighted by a state think tank that estimates that local-government loans have almost doubled to 19.9T yuan ($3.28T) in 2010-2012. Total central and local government debt was almost 28T yuan at the end of 2012, representing 53% of GDP.