SHANGHAI - Chinese stocks have achieved one of the most remarkable turnarounds in history, soaring for a ninth consecutive day as government stimulus measures entice investors back into one of the most beaten-down markets worldwide. On September 30, the CSI 300 blue-chip index jumped as much as 6.5%, marking its most significant increase since 2015, as traders rushed to buy shares ahead of a week-long holiday.
The index, which had lost over 45% of its value from a peak in 2021 through mid-September, has since surged more than 20%, approaching a technical bull market. Hong Kong's benchmark Hang Seng Index also saw gains, trading 1.5% higher.
Last week, the CSI 300 index soared nearly 16%, while the broader Shanghai composite jumped nearly 13%, both achieving their largest weekly gains since November 2008. Similarly, the Hang Seng Index recorded its biggest weekly rise since 1998, and the fifth largest in the last fifty years.
This extended rally follows the central bank's decision to lower mortgage rates on September 29, alongside three of China's largest cities relaxing rules for homebuyers, which propelled mainland-listed property stocks up by more than 8%.
The recent measures are part of a sweeping stimulus package released on September 24, which also includes interest rate cuts, cash relief for banks, and liquidity support for the stock market. Despite prior rallies that have not sustained, investors are optimistic that the current momentum may last in the near term, with turnover on the Shanghai and Shenzhen bourses exceeding one trillion yuan (approximately S$182.6 billion) shortly after trading began on September 30.
Charu Chanana, a global markets strategist at Saxo Markets, noted, 'The pace of the turnaround is clearly reflective of how oversold the market was.' There is a prevailing belief that this time, authorities' support for the markets will prove effective.
Brokerages were among the top gainers, with Citic Securities hitting the daily upside limit of 10%. Almost all of the CSI 300's component stocks were in positive territory.
Furthermore, the fear of missing out is affecting global markets, with hedge funds selling U.S. technology stocks while investing in mining and materials firms. David Chao, a strategist at Invesco Asset Management, stated, 'I think the euphoric surge that we saw last week in China markets could turn into something more concrete and sustainable due to a complete policy shift that could finally address the cyclical headwinds of the past three years.'
While discussions continue regarding the implementation of these policy shifts and their sufficiency, a new direction appears to have been established.