Mainland equities greet New Year with rally on economic optimism

Chinese mainland stocks greeted 2021 with a strong rally, as investors nurtured hopes for an accelerating recovery of the economy in the new year, after the country spent 2020 in something of a coronavirustriggered crisis before stabilizing economic growth.

Some securities analysts said that China’s economic rebound will send the country’s stock markets into another bull performance in 2021, though they cautioned that the US market, which is in danger of a plunge, remains a lurking threat to Chinese mainland stocks.

On Monday, the ChiNext board rose 3.77 percent to 3,078.11 points, while the Shenzhen Component Index was up 2.47 percent to 14,827.47 points. The Shanghai market rose 0.86 percent to 3,502.96 points, roughly the same level as the beginning of 2018.

The gains came after China’s economic activities were unaffected by a number of localized breakouts of COVID- 19 in multiple cities in recent days, further stabilizing anticipation for another year of solid growth.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said that the stock gains on Monday also reflected China’s launch of coronavirus vaccines, which added to the market’s anticipation of economic growth.

Institutions generally project China’s economy to post double- digit growth in the first quarter, while full- year growth will be about 8- 9 percent.

Yang Delong, chief economist at Shenzhen- based First Seafront Fund Management

Co, said that banking on such economic growth, the Chinese mainland stock markets will extend their bull trend, which started in 2019. “Gains are expected to be about the same as in 2020. The Shanghai index is expected to rise by about 1020 percent, and the tech- heavy ChiNext board should lead the rally,” Yang said.

Dong said that the US stock market is a lurking threat to mainland markets, as US shares, after nearly a decadelong bull market, are set for a fall.