After the week-long National Day holiday, China’s stock market took off like a rocket, with its major indexes reaching heights not seen for two years. The trading floor buzzed with energy as investors rushed to take part, pushing the Shanghai Composite Index up by 4.59 percent to 3,489.78 points and the Shenzhen Component Index soaring by 9.17 percent, settling at 11,495.10 points.
The return from the holiday saw over 5,000 stocks climbing higher, with sectors such as semiconductor, data security, and server operating systems leading the charge. The ChiNext Index, which focuses on innovative and high-growth companies, surged by 17 percent, surpassing the 2,500-point barrier. Clearly, the gains reflected more than just post-holiday enthusiasm.
What drove this meteoric rise? A slew of economic policies aimed at revitalizing China’s economy was released just before the holiday, and they seem to have sparked significant investor confidence. Home sales rebounded, buoyed by these measures, and stock prices followed suit. This confidence was not only displayed through market gains but flaunted through record-breaking trading volumes. The A-Share turnover exceeded one trillion yuan merely 20 minutes after the markets opened, smashing the previous record set on September 30.
The trading excitement didn’t end there; the total trading volume on China's main exchanges—Shanghai and Shenzhen—exceeded 3.45 trillion yuan on Tuesday, representing the first time it surpassed the 3 trillion yuan mark. Just to put things in perspective, this was about 340 billion yuan more than the previous trading day before the holiday.
Behind this spike, valuable insights from market analysts shed light on investor behavior. Pan Jun, from Cheese Investment, commented on the highly volatile trading patterns: "The market is needing technical adjustments after substantial increases. Some investors may now be opting for profit-taking after so much upward movement." Nevertheless, he emphasized the overall upbeat market sentiment, bolstered by the record number of new brokerage account openings during the holiday period, underscoring the growing retail investor appetite—a demographic instrumental to the market's trading activity.
These recent developments come on the heels of the People’s Bank of China announcing its significant economic stimulus package, including lowering the reserve requirement ratio and reducing rates on existing mortgages. Since then, the Shanghai Composite Index has climbed 27 percent, the Shenzhen Component Index 42 percent, and the ChiNext Index 67 percent. With these statistics, it’s clear why excitement is palpable among market players.
Adding to the optimism, the Shanghai Stock Exchange decided to roll out policies extending the trading time by five minutes starting October 8, applicable solely to new investor accounts and clients switching brokerages. This move is expected to offer more flexibility and accessibility for budding investors joining the stock market fray.
All these elements—the technical adjustments, retail investor enthusiasm, and government economic support—wove together to create the fabric of this impressive market rally. It seems like the golden days of growth might be back for China. Whether this rally has the legs to sustain itself remains to be seen, but for now, investors are reveling in this buoyant momentum.
