Shanghai Composite Index surges past 3,000 mark as economic outlook brightens

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25th February 2024 – (Shanghai) China’s primary A-share indexes culminated Friday’s trading session on an optimistic note, with the Shanghai Composite Index notably breaching the 3,000-point threshold, thereby recouping its year-to-date losses. Market sentiment has been buoyed by an amalgam of stabilising policy measures and a robust uptick in economic fundamentals, according to industry experts.

The Shanghai Composite Index soared for the eighth consecutive day, closing at 3,004.88 points—an uplift of 0.55 per cent. Its ascent was mirrored by the Shenzhen Component Index and the growth enterprise-heavy ChiNext Index, which logged gains of 0.28 per cent and 0.02 per cent, respectively. Collectively, these movements underscore a trend of sustained market confidence, with over 4,300 individual stocks ending higher and 141 hitting their upper limits. Market turnover between Shanghai and Shenzhen reached a staggering 922 billion yuan ($128.1 billion), with sectors such as robotics and the automotive chain driving afternoon gains.

Economic commentators attribute this week’s market rally to a confluence of factors, including bolstered investments by state-owned entities like Central Huijin Investment and an array of reform policies from the China Securities Regulatory Commission (CSRC). The CSRC has been particularly proactive, with its new chairman, Wu Qing, orchestrating a series of consultations aimed at enhancing regulatory frameworks and mitigating risks.

“The A-share market’s robust performance is a testament to rising investor confidence,” said Yang Delong, chief economist at First Seafront Fund Management. He added that the CSRC’s investor-centric reforms and the government’s commitment to rigorous oversight are instrumental in fostering a stable market environment.

China’s economic resurgence is not solely confined to the stock market. A strong domestic consumer market, steady foreign trade, and surging foreign investments have positioned the nation on a trajectory for above 5 per cent growth in the first quarter of 2024. This forms a cornerstone for a year-round economic rebound, according to analysts.

The Ministry of Culture and Tourism’s reports of a 19 per cent increase in holiday trips compared to pre-pandemic levels and a 7.7 per cent rise in associated spending further indicate a vibrant economic recovery.

Amid these positive indicators, multinational corporations have maintained a bullish stance on the Chinese market, intensifying their investments. This aligns with the government’s renewed focus on attracting foreign capital, as evidenced by an executive State Council meeting led by Premier Li Qiang and a Ministry of Commerce announcement highlighting a 74.4 per cent year-on-year increase in foreign enterprise establishments.