Chinese stock markets experienced a significant boom fueled by a range of stimulus measures, boosting investor confidence about the country’s economic recovery.
On Monday, the Shanghai Composite Index rose by 8.03%, closing at 3,335.44 points, while the Shenzhen Component Index saw an even larger gain of 10.68%, ending at 10,530.85 points. The ChiNext Index, which tracks China’s growth enterprises, surged by 15.52% to close at 2,178.04 points. This rally occurred just before China’s week-long National Day holiday, during which markets will be closed from Tuesday to October 7.
Record Trading Volume and Property Stocks Lead the Way
Trading volume on the Shanghai and Shenzhen exchanges reached a record high, exceeding 2.5 trillion yuan (approximately $356.76 billion). Real estate stocks led the charge, boosted by a recent ruling from the People’s Bank of China mandating commercial banks to lower mortgage rates by October 31. Additionally, Guangzhou announced the lifting of home purchase restrictions, while Shanghai and Shenzhen expanded purchasing options.
Notable real estate developers, including Greenland Holdings and Gemdale, each saw their stocks rise by 10% on Monday.
Broader Economic Stimulus
The stock market rally followed an announcement of a larger-than-expected economic stimulus package aimed at revitalizing the economy. Key measures include reducing banks’ reserve requirement ratios and lowering mortgage rates for existing homes. The government also introduced new funding instruments to enhance access to capital for stock purchases.
The Political Bureau of the Communist Party of China recently called for efforts to strengthen the capital market and attract medium- to long-term investments.
Positive Investor Sentiment
The stimulus initiatives have sparked a wave of optimism among investors, both domestically and internationally. Billionaire hedge fund manager David Tepper expressed strong support for Chinese investments, stating he would invest heavily in Chinese stocks, ETFs, and futures.
As investor confidence grows, overseas inflows into Chinese stocks have remained steady, reflecting an increasing appeal in the global market. Many domestic brokerage firms expect heightened activity during the National Day holiday, driven by a “fear of missing out” on the current market trend.
“Capital is pouring into the market, and investors are eager to seize this opportunity,” noted Zhou Maohua, a macroeconomic researcher at Everbright Bank.
