Some of the best results in both indices included Chinese financial stocks. Regulators in Beijing had loosened the rules on margin financing, the practice of investing with borrowed funds.
“The signal from regulators is clear: they are pushing for the development of margin trading and short selling business in China,” wrote Ma Ting Ting, an analyst at Chinese securities firm Guosheng Securities, in a research note on Sunday. . “We hope that regulators will continue to drive stock market activity and try to guide even more funds from banks and insurers into the stock market.”
The markets in mainland China are dominated by local investors. Virtually all investors in the mainland equity markets, 99% of the investor base, are individuals, according to a survey conducted in May by the China Securities Deposit and Clearing Corporation.
The rally also comes as talk of a bull market return heats up in mainland China. Several state-run media outlets said over the weekend that investors were rapidly returning to stocks as part of a “bullish return” and suggested that it is exactly what China needs now, indicating increased government support for the markets.
On Monday, the Chinese newspaper Securities Journal published an article stating that “cultivating a healthy bull market is important to create new opportunities.”
“In the post-Covid-19 world, the economy needs a healthy bull market more than ever,” the newspaper wrote.
Defense actions included in the Shanghai Compound also rose sharply, as tensions between the United States and China in the South China Sea rise. Two U.S. Navy aircraft carriers arrived in the region for the first time in six years, a show of Washington’s military might while rejecting China’s claim of much of the disputed region.
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