A front-page editorial in China Securities Journal said fostering a “healthy bull market” is important given China’s increasingly complicated international relations, intense financial and technological competition, and the challenge of controlling internal financial risks.
Steven Leung, executive director of institutional sales at UOB Kay Hian in Hong Kong, said the editorial had bolstered investor confidence. He said some mainland investors were also buying shares anticipating that coming changes, such as an overhaul of the Shanghai Composite, would attract more global investment.
“China’s bull markets are state sponsored” has been my short hand for analysing the Chinese market for much of the last decade.
The primary indices have inconsistent trends, where large surges have been followed by collapses and volatile ranging. The defining characteristic of broad advances has been overt government support for prices.
The central government is now doing everything it can to support confidence. That is now extending to the stock market. A rerun of the 2015 surge is not beyond the bounds of possibility.
The CSI300 Index extended it breakout to new recovery highs today and a clear downward dynamic would be required to question scope for additional upside.
The ChiNext Technology-led Index has been leading and continues to extends it uptrend.
China Fund Inc just completed an 8-year base formation.
Alibaba just broke out to new highs.
Tencent broke out to new all-time highs last week.
The Renminbi strengthened meaningfully today to close above its trend mean and signal a return to demand dominance.
China’s government bond yields closed above 3% today and looking increasingly likely to break the 30-month downtrend.