Investors rushed to join a sharp rally driven by Beijing’s latest stimulus measures, leading Chinese stocks to post their biggest single-day gain in 16 years on Monday and domestic A-shares to record their highest-ever volume.
By some market definitions, the CSI300 blue-chip index is now up about 30 percent from its February low, suggesting it is in a bull market; however, most of the gains over the past week have happened quickly and in a few sessions.
Traders feared they might miss out on a rally ahead of a week-long holiday that starts on Tuesday, so they helped push the CSI300 index as much as 8.5%, extending its five-day gain to more than 25 percent, its strongest ever on record.
Meanwhile, the broader Shanghai Composite Index rose 8.1% to a record total turnover of 1.17 trillion yuan ($166.84 billion).
The five-day gain from Tuesday was extended by 21.4% earlier, the strongest since 1996, after Beijing began implementing stimulus measures to curb a slowdown in the broader economy.
It was also the largest single-day percentage gain for the CSI and SSEC indexes since 2008.
As it happened, the smaller Shenzhen index rose 11 percent and traded at 1.4 trillion yuan.
Chinese stocks have seen a massive surge since Beijing last week announced the most stringent stimulus measures since the pandemic began (ranging from massive rate cuts to fiscal support) to save the country’s economy.
The People’s Bank of China (PBOC) also introduced two new tools to strengthen capital markets, one of which is a swap program, which gives brokers, insurers and funds easier access to funding to buy stocks. To boost shares.
Investor concerns about China’s growth prospects pushed the rate to a multi-year low earlier this month.
Dickie Wong, executive director of research at Kingston Securities, said, “This is indeed a big change, the policies are so thorough, we have never seen such clear instructions to stop the decline in housing prices and support the stock market before.”
“Institutional investors are rushing into the market, and large-scale investment has pushed the Hang Seng Index to 21,000, many foreign investors are afraid of missing out, local retail investors are asking me what they should add.”
Hong Kong’s Hang Seng index, up 2.4% on Monday, is now up nearly 24% this year, overtaking Taiwan as Asia’s best stock market.
On Sunday, China’s central bank added to the positive momentum by saying it would ask banks to lower mortgage rates for home loans before Oct. 31, a sweeping policy that will help the country’s struggling property market.
The same day Guangzhou announced the lifting of all restrictions on home buying, while Shanghai and Shenzhen eased curbs on purchases.
Shares of property companies surged on Monday; mainland-listed property stocks rose 8.2 percent, while the Hang Seng mainland property index gained 6.4 percent.
Investors hope the latest measures can revive Chinese domestic consumption, which posted the biggest daily percentage rise in the past 16 years.
The CSI300 index recorded its best performance this month since December 2014, rising 21%. Similarly, the Shanghai Composite Index ended September with a gain of 17 per cent, its highest since April 2015.
The Hang Seng Index had its best month since November 2022, gaining 17 per cent. This was the first weekly gain since 1998 and the fifth-largest in the last five decades.
Mainland financial markets will be closed from Oct 1 to Oct 7 for the National Day holiday.