Chinese A-shares likely to rally in 2019 as investors become increasingly upbeat

On Monday, the bullish first trading day in the Year of the Pig, the Shanghai Composite Index rose 1.36 percent to 2,653.9 points, with total trading volume reaching 137.3 billion yuan ($20.35 billion).

The figures reflect investors’ optimistic outlook for 2019, coupled with ample liquidity in the stock market, as well as improving regulations and policies, said Zhang Xia, chief strategy analyst at China Merchants Securities.

The Shenzhen Component Index was up 3.06 percent at 7,919.05 points, with volume of 182.6 billion yuan. The Growth Enterprise Market index rose 3.53 percent, closing above the 1,300-point level, the biggest daily gain over the past three months.

Stocks of companies involved in 5G, agriculture, telecommunications and electronics took the lead in the bullish Ashare market. In particular, the 5G sector buoyed the broader market, with shares of EastCom, Boomsense and Chunxing Precision Mechanical rallying.

Zhang said that 5G requires close attention in 2019, as China prepares to issue temporary 5G licenses to operators this year. This indicates that 5G shares will remain firm with more government supportive policies.

The A-share market is likely to remain positive in February due to a number of favorable factors, such as investors’ improved sentiment and supportive state policies, Zhang added.

Another notable jump took place in film stocks, supported by the Spring Festival holiday season’s box office receipts. However, Zhang said it will be hard for this sector to maintain strong momentum due to the cyclical nature of the industry and the limited number of blockbuster films.