Chinese stocks surge to highest since 2015

Chinese stocks continued one of the most dramatic comebacks in history, rising for the ninth consecutive day as government stimulus measures attracted investors back to one of the world's most undervalued markets.

The CSI 300 Index jumped as much as 7.7% on Monday, the most since 2015, as traders rushed to buy shares in the last session before a week-long holiday, News.Az reports, citing Bloomberg.

The index, which lost more than 45% of its value from a 2021 high through mid-September, has since soared more than 20% — heading for a technical bull market. Its rally last week was the biggest since 2008.

The extended gains came after three of China’s largest cities relaxed rules for homebuyers, while the central bank also moved to lower mortgage rates. The latest measures were among the key elements of a sweeping stimulus package released Tuesday that also included interest rate cuts, freeing-up of cash for banks, as well as liquidity support for stocks.

Having faced several false dawns in recent years, investors may be betting that the current momentum may be sustainable. In a sign of continued frenzy, combined turnover on both the Shanghai and Shenzhen bourses exceeded 1.6 trillion yuan ($228 billion) in the morning session, exceeding the total value of shares that changed hands Friday.

Demand for Chinese stocks was so strong on Monday that several local brokerages experienced delays in processing orders on their trading applications, local media reported, with some securities firms also seeing a surge in requests to open new trading accounts.

The latest hiccups came after a burst of trading led to glitches that overwhelmed the Shanghai stock exchange on Friday.

Brokerages led the rally, with Citic Securities Co. hitting the 10% daily upside limit, given the perception that they are the most direct beneficiaries of rising stock transactions. Almost all of CSI 300’s component stocks were in the green. A Bloomberg Intelligence gauge of Chinese property developers jumped as much as 14%.

Renewed optimism about the world’s second-largest stock market is also spreading globally, with hedge funds selling US technology stocks and piling into mining and materials firms. Meanwhile, iron ore spiked almost 11% as investors bet that China’s efforts to ease property woes will improve demand from the world’s top consumer of the steel-making ingredient.

The country’s ten-year sovereign bonds fell Monday, extending their biggest weekly drop in a decade, as investors pivoted toward risk assets on expectations a widespread stimulus blitz will revive economic growth.

The Fear and Greed Indicator of the Shanghai Composite Index, which measures the buying and selling momentum for the stock benchmark popular among China’s retail investors, rose to the highest since 2020 on Monday.

News.Az