Bullish start for A-share market
CHINA’S three major A-share indexes closed higher across the board on Monday, the first day that the country opened trading in the Year of the Dragon, heralding a strong start to the new year.
With the country’s economy on course to continuously recover, thanks to the vitality of the consumption market and effective policy support, Chinese analysts and foreign institutions remain bullish on China’s stock market as well as its economic growth in 2024.
China’s stock market stretched its gains on Monday, with the Shanghai Composite Index seeing a 1.56-percent increase, regaining the benchmark level of 2,900 points. The Shenzhen Component Index rose by 0.93 percent, and the ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, surged 1.13 percent.
Over 4,200 individual stocks saw a higher opening, and 270 stocks rose to their daily limit. Trading at Shanghai and Shenzhen stock markets reached 957.2 billion yuan ($132.9 billion). AI concept stocks rallied on Monday trading, with Sora concept shares leading the rise. Arithmetic and education shares also gained, while coal, oil and concept stocks continued to be strong.
China’s top securities regulator on Sunday and Monday held symposiums to solicit public opinion on strengthening supervision and promoting high-quality development of the capital market, as well as risk prevention and mitigation.
Symposium participants advocate the industry watchdog systemically step up market oversight as the healthy development of the stock market is closely tethered to many investors’ “pocketbooks.”
The A-share Chinese stock market realized a three-day gain on February 8, wrapping up trading in the Year of the Rabbit. Over 1,000 stocks rose to their daily limit of 10 percent or more.
“The post-holiday stock market witnessed a good start and a continuation of a pre-holiday upward trend, which released a positive signal indicating that confidence in the Chinese stock market is gradually returning through a flurry of policy support,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co., told the Global Times on Monday.
In the volatile stock market, Exchange-Traded Funds (ETF) have become one of the important channels for large amounts of funds to enter the market. Since the beginning of this year, in just over one month, over 320 billion yuan of funds have entered the market with the help of equity ETFs, and institutional investors such as Central Huijin Investment have also made intensive efforts, media outlet stcn.com reported on Monday.
“It is a good sign for China that the stock market has ushered in a good start, which is a result of the pre-holiday release of various types of favorable policies,” Pan Helin, a professor at Zhejiang University’s International Business School, told the Global Times on Monday.
“China’s stock market has a good foundation to further improve the system and enhance value-shaping power,” Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, said.
Yang expects the market in the Year of the Dragon to embrace better investment opportunities, as economic recovery will be further strengthened, with an array of policies including the gradual relaxation of real estate policies, an increase in government investment and reform of the capital market.
As the bustling holiday spending helps brighten the outlook for China’s economic recovery in 2024 and beyond, Chinese experts and foreign institutions believe that the strong performance of the stock market is just a start for the country’s robust economic growth this year.
“China’s gross domestic product growth is expected to reach 4.9 percent in 2024, and we expect consumption and investment to be the main contributors to economic growth this year,” Zhu Haibin, chief China economist and head of Greater China Economic Research of JP Morgan, said in a recent report.
Zhu noted that consumption is expected to grow by 6 percent for the year, and income growth is expected to be the main driver of consumption, while the household savings rate is expected to fall further to pre-pandemic levels, which will contribute 1 percentage point to real consumption growth.
“Overall, we believe China’s economy will continue to gain momentum in 2024, driven by a combination of consumer confidence, consumption activity, investment growth and supportive initiatives,” said Lai Yizhe, head of China Equity Research of JP Morgan.