stocks are back on the bull market, a surprising achievement after a
volatile summer wiped out trillions of dollars in value from mainland
equities, reported Wall Street Journal.
The benchmark Shanghai Composite Index has rallied 20.3 percent since
Aug 26, the bottom of the summer selloff. Such surge signals a bull
market where by definition stocks rise 20 percent from a recent low.
The Shanghai gauge climbed 1.8 percent to close at 3,522.82 on Thursday,
bringing its year-to-date gains to 8.9 percent.
The outstanding balance of margin debts at the Shanghai Stock Exchange
rose to a two-month high of 648.76 billion yuan ($102.1 billion) as of
Thursday, according to the bourse data, but are still down 54 percent
from its 1.4 trillion yuan peak in June when the Shanghai index touched
The rebound came as the government launched a spate of policies to prop
up the economy and restore market faith. Among which, China cut
benchmark interest rates for a sixth time in a year on Oct 23 and
unveiled its five-year plan ending 2020.
The country will have to keep its economy growing at no less than 6.5
percent over the next five years to realize the goal of doubling 2010
gross domestic product and per capita income by 2020, President Xi
Jinping said, according to Xinhua.
Financial and technology stocks fueled the latest gains after central
bank governor Zhou Xiaochuan was reported to have said that China would
launch a trading link connecting bourses in Shenzhen and Hong Kong
within the year. Brokerages including Huatai Securities and Everbright
Securities rallied by the daily limit of 10 percent over the past two
The Chinese government has likely spent hundreds of billions of yuan
buying shares to stabilize the market since it announced state
intervention in early July, said the Journal citing consensus estimate,
adding that authorities have held on to stocks since then, if not adding
more to their portfolio.
Despite the gains, some investors remain skeptical as lessons were
learnt from the rout, while for others, confidence that the government
will not soon sell its holdings has encouraged more buying, reported the