China stock traders’ new mantra is enjoy the rally while it lasts
Chinese stocks from world’s worst to best performers is stoking cautious optimism that the rally will continue as long as favorable market policies remain in place.
Rarely has a week gone by in 2024 without Beijing unleashing new measures to buttress the market or the economy. That policy resolve has pushed an index of Chinese shares listed in Hong Kong up more than 10% this month, topping the 90-strong list of major global equity gauges. The CSI 300 Index of onshore shares has risen for nine days, its longest winning run since 2018.
With state funds seen drumming up the market while the economy faces persistent headwinds, the rally may well be on borrowed time. Yet with depressed valuations and light positioning among global and local money managers, investors see a rare window to boost returns from the battered market.
“The pain threshold for authorities has been reached,” said Arthur Budaghyan, chief emerging markets strategist at BCA Research. “We’ve reached oversold conditions and policy reaction is much more aggressive. So I would expect more tactical upside from current levels.”
The current mood marks a rapid shift from last month, when the Hang Seng China Enterprises Index was the world’s worst performer. The CSI 300 sank to a five-year low on Feb. 2 as a blow-up in snowball derivatives and margin call fears intensified bearish sentiment.
The gloom has slowly faded since as a steady stream of policy support measures showed Beijing is determined to end the rout.
State funds have ratcheted up share
