China's major stock indexes at Monday's trading closing are shown on a screen in Shanghai. Photo: cnsphoto

Chinese mainland stocks greeted 2021 with a strong rally, as investors nurtured hopes for an accelerating recovery of the economy in the new year, after the country spent 2020 in something of a coronavirus-triggered crisis before stabilizing economic growth.

Some securities analysts said that China's economic rebound will send the country's stock markets into another bull performance in 2021, though they cautioned that the US market, which is in danger of a plunge, remains a lurking threat to Chinese mainland stocks. 

On Monday, the ChiNext board rose 3.77 percent to 3,078.11 points, while the Shenzhen Component Index was up 2.47 percent to 14,827.47 points. The Shanghai market rose by 0.86 percent to 3,502.96 points, roughly the same level as the beginning of 2018. 

Graphics: GT

The gains came after China's economic activities were unaffected by a number of localized breakouts of COVID-19 in multiple cities in recent days, further stabilizing anticipation for another year of solid growth. 

Data from tourism service provider Trip.com showed that it's becoming difficult to book hotels in many cities during the New Year holiday, as travel plans remain unaffected. 

The Global Times also observed many restaurants were full during the 2020 Christmas season in Shanghai, and celebrations like Christmas markets were rolled out as usual.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said that the stock gains on Monday also reflected China's launch of coronavirus vaccines, which added to the market's anticipation of economic growth. 

Institutions generally project China's economy to post double-digit growth in the first quarter, while full-year growth will be about 8-9 percent. 

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, said that banking on such economic growth, the Chinese mainland stock markets will extend their bull trend, which started in 2019.

"Gains are expected to be about the same as in 2020. The Shanghai index is expected to rise by about 10-20 percent, and the tech-heavy ChiNext board should lead the rally," Yang said. 

Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said that multiple factors will push shares higher in 2021, including more inflows of overseas capital, the entry of long-term capital like pension funds, and the impact of the general economic rebound on the performance of listed companies. 

But he cautioned that as the bull trend has persisted for some time, the gains may be less than in 2020. 

Dong also said that the US stock market is a lurking threat to mainland markets, as US shares, after nearly a decade-long bull market, are set for a fall.

"After the launch of vaccines for the coronavirus, the US Federal Reserve might withdraw its quantitative easing policies. This could be the trigger for a plunge on US markets, and when that happens, the Chinese market would also head down accordingly," Dong told the Global Times, adding that because of the uncertainties of US markets, it's hard to predict how Chinese stocks would perform this year.