China's central bank to cut interest rates in January 2019 to support economy: economists

China's A-share market is off to a flying start in 2020, with the three major mainland boards all surging above 1 percent during the morning session on Thursday, the first trading day of the year. 

The Shanghai Composite Index closed up 1.15 percent to 3,085.20 points. The Shenzhen Component Index edged up by 1.99 percent to 10,638.82 points. The high-tech ChiNext board rose by 1.93 percent to 1,832.74 points.

Quartz and gaming shares led the rally. More than 70 stocks rose to the daily trading limit of 10 percent. 

Mainland equity markets were on a tear in 2019despite the China-US trade war, US sanctions on Chinese tech companies and China's slowing internal economic pressure. 

Last year, the Shanghai market rose by about 22 percent while the Shenzhen market was up by around 45 percent, making the A-sharemarket one of the best-performing stock markets in the world. 

The bullish trend demonstrated by such stock rises has also shored up market-watcher confidence. 

"Mainland stocks will continue a slow bull trend in 2020, and the Shanghai market is likely to rise by another 20 percent this year," said Yang Delong, chief economist at the Shenzhen-based First Seafront Fund Management.

Mainland shares rose on Thursday after China unleashed fresh capital of about 800 billion yuan ($115 billion) into the markets by cutting the reserve requirement ratio (RRR), cash that banks must hold as reserves, for financial institutions. 

China's central bank has cut the RRR eight times since early 2018 to free up more funds for banks to lend in order to stimulate economic growth. 

"The RRR cut is a catalyst for A-shares' bullish trend," Yang said. "It will help shore up market confidence and stabilize anticipation for economic growth, thus fuelling a strong rebound on the A-share market in the spring," he said.