Chinese Stocks at Five-Year High Are Only Just Getting Started
(Bloomberg) -- Greed is firmly back in China's stock market.
Leverage in the nation's equities is the highest since the wake of 2015's epic bubble, turnover is surging, while the CSI 300 Index has jumped nearly 7% this week to hit a five-year high. All of China's major stock benchmarks, from indexes tracking Shanghai's giant state-owned firms to those that follow start ups in Shenzhen, are technically overbought.
The enthusiasm from retail investors is also evident in China's convertible bond market, where deals are seven times more competitive than last year. One note was so popular it was 170,600 times oversubscribed, the most since at least 2007.
History shows such momentum-fueled rallies in China tend to accelerate as the fear of missing out grows, posing challenges for officials as they seek to limit speculation -- especially when there's plenty of liquidity looking for returns within the nation's capital-controlled borders.
Efforts by regulators to boost the attractiveness of stocks has helped drive the rally, along with the gradual economic recovery from a crushing contraction in the first quarter.
The following charts illustrate how heated the equity rally is getting:
The CSI 300 gauge of stocks listed in Shanghai and Shenzhen is now up almost 8% this year, making it one of the world's top performers.
The outstanding margin debt in China's stock exchanges has risen to 1.16 trillion yuan ($164 billion), the highest since January 2016.
Turnover has jumped above 1 trillion yuan, suggesting the rally has broad support.
The $1.65 trillion rebound since March has pushed the value of China's stock market -- the world's second largest -- to $8.4 trillion.
Five of the country's major stock benchmarks are now firmly in overbought territory. The relative-strength index is especially high in Shenzhen, whose stock exchange is heavily tilted toward technology firms.
©2020 Bloomberg L.P.
With assistance from Bloomberg
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
