Chinese stocks surge as investors rush to catch bull cycle
Published: Jul 07, 2020 11:43 AM

An investor checks stock information at a brokerage in Fuyang, East China's Anhui Province on Wednesday. Photo: CFP

Chinese shares continued to rise on Tuesday following a sudden rally the previous day, as investors attempt to seize the opportunity of what they believe is the beginning of a bull market like that seen in early 2015. 

On Tuesday, the flagship Shanghai Composite Index had risen 0.37 percent to 3,345.34 points, while the Shenzhen Component Index had risen 1.72 percent to 13,163.98 points. The tech-heavy ChiNext board had climbed 2.44 percent to 2591.26 points.

The previous day, the Shanghai market rose a significant 5.71 percent, and the Shenzhen market 2.17 percent. Share turnover surged above 1.5 trillion yuan ($213.77 billion) on the two markets, hitting a near five-year high, while about 16 billion yuan flowed into the mainland from Hong Kong.  

Though it was hard to pinpoint a clear single driver for such a strong rally, the surge kindled hope among domestic investors who have long awaited a bull market. Articles predicting a bull trend flooded China's social media platforms, and analysts stressed the growth momentum is very strong on the domestic financial markets backed by China's rising global influence and economic rebound.

"China is showing a double bull trend in stocks and the yuan's exchange rate as its control of the virus has been recognized by the world, and China is playing an increasingly important role in global affairs," Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times. 

According to Li, not only is overseas capital scrambling to enter the mainland markets, but domestic investors are also "waking up" by shifting deposits to these stock markets. 

On Tuesday morning, the offshore yuan had surged to 6.9988 against the US dollar by 9:04 am, hitting a roughly four-month high. 

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, also said that signs of a "comprehensive bull market" have emerged on the A-share markets. 

Hong Kong's Hang Seng Index edged  down by 1.38 percent to 25,975.66 points. The market rose by 3.81 percent on Monday.