Turnover on SSE and SZSE exceeded 1.5 trillion yuan for the 38th consecutive trading day

Turnover on SSE and SZSE exceeded 1.5 trillion yuan for the 38th consecutive trading day

The Shanghai and Shenzhen stock exchanges (SSE and SZSE) have seen turnover exceed 1.5 trillion yuan for the 38th consecutive trading day, reflecting a robust rally in Chinese equities. This surge is particularly notable given the muted economic data and ongoing geopolitical tensions.

The CSI 300 Index jumped 10% in August, its best performance since a rally last September [1]. This impressive gain is largely attributed to increased household investment, driven by record-high savings and lower interest rates. Wealthy investors have led the charge, often via hedge fund investments [1].

Despite the strong performance, there are concerns about the sustainability of the rally. Market turnover has hit a record, and margin trades have surged to an all-time high, signaling a growing appetite for risk-taking [1]. Regulators have implemented measures to curb speculative fever, such as capping daily purchases of top-performing portfolios and tightening oversight on credit card-funded stock investments [1].

Goldman Sachs has expressed optimism about the Chinese stock market, predicting room for further growth [2]. This sentiment is buoyed by easing trade tensions with the United States and the government's "anti-involution" campaign to combat price wars and overcapacity [1]. Additionally, advancements in artificial intelligence are expected to drive technological progress and boost corporate earnings [1].

However, the financial authorities face a challenge in maintaining a "slow bull market" to avoid a sharp reversal that could inflict heavy losses on retail investors [1]. Analysts are warning of a potential stock market bubble unless corporate earnings prospects improve or the government boosts its support for the economy [1].

The Hong Kong stock market also experienced mixed performance on Wednesday, with the Hang Seng Index falling by 0.60% [2]. International gold prices continued to set new historical highs, with spot gold surpassing the $3,570 mark [2].

The current rally underscores the need for Chinese regulators to balance market growth with stability. A sharp reversal could exacerbate the ongoing economic slowdown and real estate crisis, potentially impacting consumer confidence and social stability [1].

References:
[1] https://www.straitstimes.com/business/companies-markets/why-chinas-world-beating-stock-rally-is-making-investors-anxious
[2] https://news.futunn.com/en/post/61633066/hong-kong-stock-market-morning-report-goldman-sachs-optimistically-predicts