[HONG KONG] China and Hong Kong stocks jumped on Monday (Aug 25), led by the rare earth and property sectors, extending the recent bull run as abundant liquidity continued to fuel gains.
At market close, the Shanghai Composite index was up 1.5 per cent at 3,883.56, the highest since August 2015. That brings its gain since the most recent low in April to over 25 per cent
The blue-chip CSI300 index added 2.1 per cent to 4,469.22, surpassing the previous intraday peak made last October to reach the highest level since July 2022.
In a sign of surging market enthusiasm, turnover on the Shanghai and Shenzhen exchanges soared past 3 trillion yuan (S$538 billion), marking the second-highest level on record since Oct 8, when Beijing’s stimulus package ignited a market-wide rally.
Leading gains on Monday, the property sector jumped 5 per cent as Shanghai became the latest Chinese city to relax home-buying restrictions. Developer China Vanke surged by as much as the 10 per cent daily limit.
The rare earth sector rallied 6.5 per cent to its highest level since late 2021, following Beijing’s announcement on Friday of new measures to tighten control over supply.
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The semiconductor sector added 1.8 per cent at close after rallying nearly 6 per cent in early trades. Chipmaker Cambricon Technologies jumped 11.3 per cent to a fresh record high.
“We see the rally continuing on abundant domestic liquidity from deposit migration, fund issuance, and insurance fund buying,” analysts at HSBC Qianhai said in a note.
The firm also lifted the end-2025 targets to 4,000 for the Shanghai Composite index and 4,600 for CSI 300, suggesting an upside potential of 5 to 7 per cent.
Many equity investors believe maturing household deposits are flowing back into equities amid lower rates and rising market optimism, Goldman Sachs noted?
“There is rising conviction that the market retains significant potential to break previous highs.”
In Hong Kong, the benchmark Hang Seng Index was up 1.9 per cent to 25,829.91, reaching the highest level since October 2021. REUTERS
