China’s stock trading volume in Shanghai and Shenzhen has surged dramatically in recent days, exceeding USD142 billion per day, fueled by a substantial economic stimulus package unveiled by the central government. The trading volume on both exchanges has consistently surpassed CNY1 trillion over the past three trading days, reflecting a bullish market sentiment.
Recent data from the financial information platform Wind indicates that more than 5,200 stocks saw advances in trading on the Shanghai and Shenzhen bourses, with transactions totaling over USD199 billion. The positive market sentiment was evident as major indices recorded significant gains. The Shanghai Stock Exchange Composite Index rose by 2.8 percent, nearing the 3,100 mark, while the Shenzhen Stock Exchange Component Index surged by 6.7 percent. The Beijing Stock Exchange 50 Index also saw a remarkable 11 percent increase.
The ChiNext Index in Shenzhen, often likened to Nasdaq, experienced its most substantial single-day gain ever, soaring by 10 percent to reach 1,885.49. The sectoral performance was notable, with the food and beverage sector, particularly liquor stocks, driving significant gains. Stocks such as Sichuan Swellfun and Shede Spirits saw substantial increases, with some hitting the exchange-imposed limit or surging by more than 10 percent.
In contrast, bank stocks faced a downturn, with major players like Agricultural Bank of China, Bank of Communications, China Construction Bank, and Industrial and Commercial Bank of China all experiencing declines exceeding 3 percent. The market dynamics have prompted private equity firms to adopt a bullish stance on the future market outlook, anticipating increased risk appetite among investors.
Industry experts have noted that the recent robust market performance can be attributed to the unveiling of strong policy measures by China’s financial authorities. These measures include reductions in the reserve requirement ratio, central bank interest rates, and mortgage rates, along with the introduction of a relending tool to facilitate lending to listed companies for stock buybacks and share increases.
Founder Securities highlighted the anticipated rise in risk appetite among investors due to proactive monetary and fiscal policies. The market outlook has been bolstered by the confidence instilled through these strong policy interventions, as observed in the market rebound. Galaxy Securities echoed similar sentiments in its report, emphasizing the positive impact of the recent policy measures on market confidence and performance.
The surge in trading volumes and stock market performance in Shanghai and Shenzhen underscores the significant influence of government policies on market dynamics. The record-breaking trading volumes and index gains reflect a renewed investor confidence and optimism in the market’s trajectory, driven by the supportive policy environment created by the central authorities.
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