Chinese stocks have achieved one of their most remarkable turnarounds in history, surging for the ninth consecutive day as government stimulus efforts draw investors back into one of the world’s most battered markets. On Monday, the CSI 300 Index soared by as much as 6.5%, marking its largest daily gain since 2015, as traders rushed to buy shares ahead of a week-long holiday. After losing over 45% of its value from a 2021 peak to mid-September, the index has since rebounded by more than 20%, approaching a technical bull market. Last week’s rally was the largest since 2008.
This extended upswing follows the relaxation of rules for homebuyers in three of China’s major cities, alongside the central bank’s decision to lower mortgage rates. These measures are part of a comprehensive stimulus package announced on Tuesday, which also includes interest rate cuts, increased cash availability for banks, and liquidity support for the stock market.
Although the market has seen several substantial rallies in recent years that ultimately led to deeper declines, investors are optimistic that the current momentum may prove sustainable, at least in the short term. A clear sign of this enthusiasm is the combined trading volume on the Shanghai and Shenzhen stock exchanges, which surpassed one trillion yuan ($143 billion) within just over 30 minutes of Monday’s opening.
“The rapid pace of the turnaround reflects how oversold the market was,” stated Charu Chanana, a global markets strategist at Saxo Markets. “There is a strong belief that this time is different, particularly regarding authorities’ support for the markets.”
Brokerages were among the biggest gainers, with Citic Securities Co. reaching the daily limit of a 10% rise. Nearly all stocks within the CSI 300 index registered gains.
The sense of urgency is also resonating with offshore investors, as hedge funds shift away from U.S. technology stocks to invest in mining and materials firms.
“I believe the euphoric surge we observed in Chinese markets last week could evolve into a more concrete and sustainable trend, given the apparent policy shift aimed at addressing the cyclical challenges of the past three years,” remarked David Chao, a strategist at Invesco Asset Management. “While there may still be discussions about the implementation of these policy changes and their sufficiency, it is clear that a new direction has been established.”
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