China's Stock Market Soars for Nine Consecutive Days as Government Stimulus Measures Attract Investors

The CSI 300 Index, a key benchmark for Chinese stocks, jumped as much as 9.1% on Monday, marking its largest single-day gain since 2008.

China’s stock market experienced a remarkable turnaround on Monday, with shares surging for the ninth consecutive day as government stimulus measures continue to attract investors back to one of the world’s most battered markets.

The CSI 300 Index, a key benchmark for Chinese stocks, jumped as much as 9.1% on Monday, marking its largest single-day gain since 2008.

The recent rally comes on the heels of a series of government initiatives designed to boost the struggling Chinese economy. Three of China’s largest cities have relaxed rules for homebuyers, while the central bank has moved to lower mortgage rates.

These measures are part of a broader stimulus package that includes interest rate cuts, increased liquidity for banks, and support for the stock market.

The impact of these measures has been significant. The CSI 300 Index, which had lost more than 45% of its value from its 2021 high through mid-September, has since soared more than 20%, putting it on track for a technical bull market. The index’s rally last week was its biggest since 2008, reflecting the dramatic shift in investor sentiment.

Trading volume also surged, with combined turnover on both the Shanghai and Shenzhen bourses exceeding 2.4 trillion yuan ($340 billion) on Monday alone.

This frenzy of activity led to some technical challenges, with several local brokerages experiencing delays in processing orders on their trading applications. Some securities firms have also seen a surge in requests to open new trading accounts.

The rally was broad-based, with almost all of the CSI 300’s component stocks trading in positive territory. Brokerages, seen as direct beneficiaries of increased stock transactions, were among the leading gainers.

Property developers also saw significant gains, with a Bloomberg Intelligence gauge of Chinese property developers jumping as much as 15.7%.

The renewed optimism about the Chinese stock market is spreading globally. Hedge funds have been selling U.S. technology stocks and increasing their positions in mining and materials firms, betting on improved demand from China. Iron ore prices have spiked almost 11% as investors anticipate increased demand from the world’s top consumer of the steel-making ingredient.

However, the rapid pace of the market’s turnaround has raised some questions about its sustainability. Many investors have faced false dawns in recent years, and there is debate over whether the current momentum can be maintained.

Some analysts argue that the pace of the turnaround reflects how oversold the market was, while others see it as a sign of a more fundamental shift in China’s economic policy.

The Chinese government’s commitment to supporting the market appears to be strong. In addition to the measures already announced, there are reports of plans to recapitalize six big state banks with about $1 trillion in yuan. The government is also introducing consumption vouchers and living allowances to stimulate domestic demand.

As the Shanghai Stock Exchange prepares to close for a week-long holiday starting October 1, investors will be watching closely to see if the rally can maintain its momentum when trading resumes.

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