China's share benchmark hits 10-year high: Here we decode why
What's the story
Chinese and Hong Kong stock markets surged today, led by the rare earth and property sectors. The Shanghai Composite index closed 1.5% higher at 3,883.56, the highest since August 2015. This marks a more than 25% gain since its most recent low in April. Meanwhile, the blue-chip CSI300 index rose by an impressive 2.1%, closing at a new high of 4,469.22. It is the highest since July 2022, after surpassing last October's intraday peak earlier in the session.
Trading surge
Property sector leads gains
The Shanghai and Shenzhen exchanges witnessed a massive trading volume, crossing CNY 3 trillion. This is the second-highest on record since October 8, when Beijing's stimulus package triggered a market-wide rally. The property sector led the gains with a 5% jump as Shanghai became the latest Chinese city to ease home-buying restrictions. Developer China Vanke surged by its daily limit of 10%.
Sector performance
Rare earth and semiconductor sectors witness massive rallies
The rare earth sector also witnessed a massive rally, jumping 6.5% to its highest level since late 2021. This came after Beijing announced new measures to tighten control over supply. The semiconductor sector gained 1.8% at close after an early trade rally of nearly 6%. Chipmaker Cambricon Technologies saw a whopping jump of 11.3%, hitting a record high during the session.
Future outlook
Analysts expect rally to continue
HSBC Qianhai analysts expect the rally to continue on abundant domestic liquidity from deposit migration, fund issuance, and insurance fund buying. The firm has also raised its end-2025 targets for Shanghai Composite index and CSI 300 to 4,000 and 4,600 respectively. Goldman Sachs noted that many equity investors believe maturing household deposits are flowing back into equities amid lower rates and rising market optimism.
Hong Kong surge
Hang Seng also surges
The benchmark Hang Seng index in Hong Kong also witnessed a surge, up 1.9% to close at 25,829.91, the highest level since October 2021. The tech index rose by 3.1%, while the Chinese H-share index listed in Hong Kong also saw gains of 1.9%.