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Chinese equities rebound from multi-year lows: Shanghai Composite Index records highest-ever turnover since 2008

The CSI300 index is now up nearly 30% from its February data, entering bull market territory. The rally has been fueled by the People's Bank of China's introduction of two fresh tools to shore up the capital market. Investors are scrambling to join the rally ahead of a week-long holiday starting Tuesday. The Shenzhen index soared 11%, with a turnover of 1.4 trillion yuan. What does this mean for China's economy? Follow us for more updates!

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It is a historic day for the Chinese economy as its Chinese stocks skyrocketed on Monday, with the CSI300 blue-chip index surging 8.5%. Along with this, the Shanghai Composite Index jumped 8.1%, its biggest single-day gain since 2008.

Domestic A-shares saw record-high turnover, while key indices posted eye-popping gains, pushing China into what many analysts now describe as a bull market. The blistering rally, sparked by Beijing's latest stimulus measures, has sent the CSI300 index soaring nearly 30% from its February lows.

The CSI300 blue-chip index, a key gauge of large-cap stocks, soared 8.5% by the close of trading, bringing its five-day gain to an astonishing 25%, the strongest on record.

Additionally, the Shanghai Composite Index recorded a total turnover of 1.17 trillion yuan ($166.84 billion). While the smaller Shenzhen index soared 11% with a turnover of 1.4 trillion yuan.

On this market surge, Stephen Innes, Managing Partner at SPI Asset Management said, “This is a clear signal that the market is responding positively to the stimulus measures.”

He further added, “The rate cuts and fiscal support have exceeded market expectations, and the introduction of new tools to shore up the capital market has lit a fire under beaten-down Chinese equities.”

Beijing's stimulus measures, announced last week, include outsized rate cuts and fiscal support to arrest a slowdown in the broader economy.

The People's Bank of China (PBOC) introduced two fresh tools to boost the capital market, including a swap programme allowing funds, insurers, and brokers easier access to funding to buy stocks.

In an official statement, Ken Cheung, Chief Asian FX Strategist at Mizuho Bank said, “The PBOC's move to introduce new tools to support the capital market is a game-changer. This will provide liquidity to the market and help stabilize investor sentiment.”

Zhang Gang, an Analyst at Central Securities, added to this and said, “The stimulus measures will take time to filter through the economy, but the market is pricing in a recovery.”

As the week-long holiday approaches, investors will be watching closely to see if the rally sustains. With China's economic growth slowing, the stimulus measures are crucial to shoring up investor confidence.

“The market is sending a clear message that it believes in Beijing's ability to stabilize the economy,” said Innes.  He concluded, “This rally has legs, and we expect further gains in the coming weeks.”