Shanghai, China – Chinese stocks have experienced a significant turnaround, with the CSI 300 Index surging for a ninth consecutive day. This remarkable increase comes after the market faced a steep decline earlier in the year. The index, which had lost over 45% of its value by mid-September, has since climbed more than 20%, signaling a potential shift towards a bull market.
The recent upward trend can be attributed to various government stimulus measures, including relaxed rules for homebuyers in major cities and lower mortgage rates set by the central bank. These initiatives form part of a broader stimulus package that also includes interest rate cuts and liquidity support for the stock market.
Investors, who have witnessed false hopes in the past, are hopeful that this momentum can be sustained. The frenzied trading activity on Monday saw a combined turnover of over 1.6 trillion yuan, indicating a high level of investor participation in the market. The demand for Chinese stocks was so strong that some brokerages experienced delays in processing orders.
Brokerages have been leading the market rally, with Citic Securities Co. hitting the daily limit of a 10% increase. The positive sentiment has extended beyond Chinese borders, with global hedge funds adjusting their portfolios to capitalize on the renewed optimism in the Chinese market. Iron ore prices also spiked, reflecting investor confidence in improved demand from China, the largest consumer of the commodity.
Despite the positive developments in the stock market, Chinese sovereign bonds fell as investors shifted towards riskier assets in anticipation of a stimulus-driven economic recovery. The Fear and Greed Indicator for the Shanghai Composite Index reached its highest level in years, reflecting the strong buying momentum in the market.
Analysts believe that the recent surge in Chinese markets could be sustainable, as policymakers appear committed to addressing economic challenges faced in recent years. While debates may continue on the effectiveness of these policy shifts, many are optimistic about the new direction taken by Chinese authorities. The market is closely watching how these policies unfold and their impact on economic growth.