China Stocks’ Trillion-Dollar Rally Pushes Another Index Toward Bull Market
Bloomberg
Published Feb 25, 2019 16:11
Updated Feb 25, 2019 16:45
China Stocks’ Trillion-Dollar Rally Pushes Another Index Toward Bull Market
(Bloomberg) -- A more than $1 trillion rally in Chinese stocks has another equity gauge headed for a bull market.
The CSI 300 Index rose as much as 4.3 percent Monday, extending its gain from a Jan. 3 low to more than 20 percent -- the level that typically denotes a bull market after a drop of the same size. The gauge of shares listed in Shanghai and Shenzhen is still around 16 percent below its 2018 peak.
China’s small-cap ChiNext Index entered a bull market Friday. Investors are embracing risk as the U.S. and China appear to be making progress on trade talks and after the new head of the country’s securities watchdog lifted some trading curbs. A measure of margin debt in China’s stock markets is rising after hitting its lowest level in more than four years on Feb. 1.
"Even if stocks retreat in the short term, there’s still room for further gains as leverage is still way below the peak despite the increase," said Shen Zhengyang, a Shanghai-based strategist with Northeast Securities Co. "Investors also have to bear in mind that economic fundamentals are still bad, so in order to avoid getting burned in a likely more volatile market, it’s key to always remain wary."
The change in investor sentiment has also boosted the yuan, which is the best performer among major currencies since Feb. 1, strengthening 0.9 percent against the dollar. The currency was up 0.41 percent at 6.6879 as of 1:08 p.m. in Shanghai.
Other stories of note on Monday:
- All the Ways China Influences Yuan, and How to Monitor Them
- China’s Stock Surge Puts World-Beating Bond Rally in Shade
- China Stock Turnover Swells as Investors Cheer Bull Market
- China Brokerages Surge as Sector a Rare Focus At Policy Meeting
(Updates with prices.)
To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at twang234@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Philip Glamann, Magdalene Fung
©2019 Bloomberg L.P.
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