Chinese stocks witness bull market after biggest surge since 2008
What's the story
Chinese stocks have been on a hot streak for nine days straight, officially entering bull market territory. This surge is mainly thanks to the government's stimulus measures.
The CSI 300 Index, which tracks how China's stock market is doing, jumped 8.5% on Monday—its biggest one-day gain since 2008.
The index had plummeted more than 45% from its 2021 peak to mid-September but has bounced back by over 20% since then.
Policy impact
Government stimulus measures boost investor confidence
Chinese stocks have been on a roll, and it's all thanks to some recent policy shifts like easy homebuyer rules and lower mortgage rates.
These moves were part of an all-encompassing stimulus package that dropped last Tuesday, which also included interest rate cuts and liquidity support for stocks.
The combined turnover on the Shanghai and Shenzhen exchanges reached a staggering CNY 2.6 trillion ($371 billion) on Monday, reflecting robust investor confidence.
Market frenzy
Trading surge leads to technical glitches, new account requests
The huge demand for Chinese stocks caused a few local brokerages to deal with delays while processing orders on their trading platforms.
Some securities firms even saw a spike in requests for opening new trading accounts.
This happened after the surge in trading activity last Friday, which created some technical glitches on the Shanghai stock exchange.
Andy Maynard, head of equities at China Renaissance Securities HK Ltd, commented, "Everyone has been such a bear and now they are all scrambling."
Sector performance
Brokerages and property developers lead market rally
Brokerages led the market rally, with Citic Securities Co. hitting the 10% daily upside limit.
Almost all stocks in the CSI 300 Index saw gains, and a Bloomberg Intelligence gauge of Chinese property developers jumped as much as 15.7%.
This fresh optimism about China's stock market is also impacting global investment trends, as hedge funds are selling US tech stocks and putting their money into mining and materials firms.
Global impact
China's stimulus measures spark global investment shift
China's 10-year sovereign bonds fell on Monday, extending their biggest weekly drop in a decade.
This shift is due to investors moving toward risk assets in anticipation of a widespread stimulus blitz that will boost economic growth.
The Fear and Greed Indicator of the Shanghai Composite Index, which measures stock benchmark momentum among China's retail investors, reached its highest level since 2020 on Monday.
Expert view
Policy shift could address cyclical headwinds: Invesco strategist
David Chao, a strategist at Invesco Asset Management, said the recent surge in China's markets might hint at something more lasting.
He mentioned, "I think the euphoric surge that we saw last week in China markets could turn into something more concrete and sustainable because there appears to be a complete policy shift that could finally address the cyclical headwinds of the past three years."