Chinese stocks rose for a ninth straight day as government stimulus lured investors back to one of the hardest-hit markets around the world.
The CSI 300 jumped 6.5% on Monday, its highest level since 2015, as traders rushed to buy stocks in the final session before a weeklong holiday. After losing more than 45% of its value from its 2021 high through mid-September, the index has risen more than 20% — heading into a bull market. Its rise last week was its biggest since 2008.
The continued rise came after three of China's biggest cities eased rules on home buyers, while the central bank also moved to cut mortgage rates.
The latest measures were among the key elements of a sweeping stimulus package released on Tuesday that also included interest rate cuts, freeing up cash for banks and supporting liquidity for the stock market.
While the market has been in a sharp decline after several similarly sized rallies in recent years, investors are betting that the current momentum may be sustainable, at least in the short term. In a sign of continued optimism, total trading volume on the Shanghai and Shenzhen stock exchanges topped 1 trillion yuan ($143 billion) in just over 30 minutes since trading began on Monday.
“There is a clear belief that this time is different when it comes to authorities supporting the markets,” said Charu Chanana, global markets strategist at Saxo Markets.
Brokerage firms were among the biggest gainers, with CITIC Securities hitting its daily limit of 10%. Almost all CSI 300 stocks were in the green.
Fear of missing out is also spreading abroad, with hedge funds selling U.S. technology stocks and buying shares of mining and materials companies.
“I think the sudden rally we saw last week in China markets could turn into something more realistic and sustainable because there appears to be a complete shift in policy that could finally address the cyclical headwinds of the past three years,” said David Chao, strategist at Invesco Asset Management.
He added: While there may still be debate about how these political shifts will be implemented and whether enough has been done, I believe a new direction has been charted.
