Chinese State Media Add More Fuel to $882 Billion Equity Rally
China Stocks Slip After State Media Makes a Case for Bulls
(Bloomberg) -- Chinese state media sought to highlight the growing bull case for the country’s shares.
A front-page story in the China Securities Journal noted a bullish trend in financial markets, while Shanghai Securities News said insurers are optimistic about the country’s equities. The articles come against the backdrop of the Shanghai Composite Index advancing 12 percent from Jan. 3 and the small-cap ChiNext Index adding 16 percent. A widely watched state television show also took the unusual step of airing a clip on stocks last week.
Chinese stocks, which were the world’s worst performers in 2018, have recovered more than $882 billion in value since that January low. Beijing’s increasing support for the slowing economy and the new securities regulator’s decision to ease trading restrictions have stoked an appetite for risk, with cheap valuations attracting buyers at home and abroad. The rally has been so broad it’s sent four major indexes into overdrive.
Even last year’s bears are saying investors should keep buying. While many false dawns caught traders off guard last year, rarely does a rebound in the Shanghai Composite last this long: another weekly gain this week would be its seventh in a row, the longest streak since August 2017. The rally in 2019 has already pushed the gauge above the average analyst target for the end of March.
The Shanghai benchmark closed less than 0.1 percent higher at 2,755.65 points Tuesday after climbing as much as 1 percent and falling 0.6 percent. The ChiNext gauge pared a 1.6 percent loss to 0.5 percent.
Some foreign funds have been buying ahead of MSCI Inc.’s announcement next week on whether it will feature a wider scope of A shares in its widely tracked benchmarks.
Details on the government’s plan to form a Greater Bay Area linking Hong Kong and Macau with southern cities also gave equities in the region a lift, including ports and property developers. Guangzhou Port Co., Zhuhai Port Co. and Shenzhen Yan Tian Port Holding Co. all climbed by the 10 percent daily limit. Insurers also stood out, with China Life Insurance Co. leading gains on the Hang Seng Index.
The Hong Kong benchmark was down 0.3 percent as of 3:23 p.m., with HSBC Holdings Plc dropping 1.6 percent as one of the worst performers after reporting fourth-quarter earnings that fell short of estimates.
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--With assistance from Amanda Wang.
To contact the reporter on this story: Sofia Horta e Costa in Hong Kong at shortaecosta@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, David Watkins, Will Davies
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