2024-01-18 14:32:00
The pessimism in China’s stock market continued to ferment. The A-share Shanghai Composite Index fell to a low of nearly four years on Thursday (January 18), and finally managed to hold the 2,800-point mark without any danger. Analysts believe that policymakers may send a “national team” to rescue the market, but the strong stimulus policies expected by the market will not be introduced in the short term, and investors’ patience will be further tested.
The Shanghai Composite Index has successively fallen below the 3,000-point and 2,900-point levels in the past 40 days. The day after China’s 2023 full-year economic data was released, the Shanghai Composite Index fell below 2,800 points an hour and a half after the opening on Thursday, once falling to 2,760.98 points, a new low since April 2020.
About 4,800 stocks fell in Shanghai and Shenzhen in early trading. The CSI 300 Index, which reflects the trend of blue-chip stocks in the Shanghai and Shenzhen stock exchanges, fell to a five-year low of 3,171.63 points at around 11:15 a.m.
The decline in A-shares continued until after the market opened at noon, but began to rebound rapidly one hour before the market closed, that is, around 2 p.m. The Shanghai Composite Index regained 2,800 points 10 minutes later, closing at 2,845.78 points, up 0.43% throughout the day. The CSI 300 closed up 1.41% to 3274.73 points.
Behind the rapid rebound of A-shares is the surge in trading volume of many exchange-traded funds (ETFs) that track the trend of the market. The average daily trading volume of the Huatai-Berry CSI 300 ETF soared to 15 billion yuan (RMB, the same below, S$2.86 billion) on Thursday, much higher than the average daily trading volume of 4.5 billion yuan in the past month. The single-day trading volume of E Fund CSI 300 ETF also hit a record high of 5.6 billion yuan.
This reminds investors of China’s state-owned fund Central Huijin Investment Co.’s move to increase its holdings of ETFs in October last year, which led to a rebound in the stock market. “Securities Times”‘s “Brokerage China” platform quoted industry insiders as saying that the actions on Thursday afternoon were similar to those before, and the possibility of “national team” funds entering the market cannot be ruled out.
Fu Fangjian, associate professor at Singapore Management University’s Lee Kong Chian School of Business, analyzed in an interview with Lianhe Zaobao that the trading volume of related ETFs soared in a short period of time, which was difficult to drive by individual investment institutions alone; and there was no major information released in the market at that time. From the perspective of volume and time, All are more in line with the characteristics of the “national team” bailing out the market. It is expected that this move will stabilize market sentiment in the short term and temporarily stop the decline of A shares.
On the other hand, the Hong Kong stock market rebounded after three days of losses. The Hang Seng Index opened higher on Thursday, climbing 0.75% to 15,391.79 points throughout the day, led by gains in semiconductor and Internet stocks.
China’s full-year economic data released the day before lacked bright spots. Analysts believe that if the government does not introduce large-scale stimulus policies, it will be difficult to maintain economic growth at 5% this year. China’s population data released during the same period showed that the aging trend is intensifying, further impacting the already fragile market sentiment.
Fu Fangjian said that although investors generally expect the government to increase stimulus efforts, it is expected that the priority of policymakers is not to rescue the market, but to take advantage of the low period to make structural adjustments to the economy, such as reducing dependence on the real estate industry. “From the current point of view, the top management has strong determination in this regard, and the side effect is to affect the sentiment of the stock market. Therefore, we cannot expect that there will be a bull market this year. The stock market will continue to rise until there is real good news on economic fundamentals. “
Chinese Prime Minister Li Qiang emphasized at the Davos Forum in Switzerland on Tuesday (16th) that in the process of promoting economic development, China “insisted on not engaging in strong stimulus and did not exchange short-term growth at the expense of accumulating long-term risks, but focused on enhancing endogenous development momentum.” “.
The People’s Bank of China kept its key policy rate unchanged on Monday (15th), disappointing investors who were looking forward to a rate cut. Wang Tao, head of Asian economic research and chief China economist at UBS investment bank, judged during an investor conference call on Thursday that a significant interest rate cut or quantitative easing is unlikely, and the authorities may use more fiscal policies to boost the economy.
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