Shanghai stocks gain ahead of 1st-quarter GDP data, fading concerns over liquidity
- The Shanghai benchmark share index rose to the highest level in almost 13 months on Tuesday, amid signals an economic recovery is taking shape
- The Shanghai Composite Index advanced 2.4 per cent, while the Hang Seng Index rose 1.1 per cent
China’s stocks rose to an almost 13-month high, with the rally on the benchmark resuming, as investors brushed aside concerns about tightening liquidity and before the release of the data on economic growth.
The Shanghai Composite Index advanced 2.4 per cent, or 75.81 points, to 3,253.60 at the close on Tuesday, the highest closing level since March 22, 2018. The gauge finished higher for the first time in four trading days and recouped all the losses over the past three days. Hong Kong’s Hang Seng Index added 1.1 per cent.
The resumed run-up on the mainland-traded stocks came after the People’s Bank of China added back the reference to keeping control of the money supply floodgate in a statement after the quarterly monetary policy meeting. The re-emphasis on liquidity management was interpreted as an official acknowledgement of a firm economic recovery. Meanwhile, the statistics bureau was due to release data on first-quarter economic growth on Wednesday morning, which was estimated at 6.3 per cent in a Bloomberg survey of economists.
“I am not worried about the liquidity issue as liquidity won’t get overly tight and the economy recovery now looks very solid,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “The biggest risk facing the market should come from the regulatory front. If stocks rise at a runaway pace, that’ll very likely incur the intervention from the government.”
The latest figure from China Securities Depository and Clearing showed that the bull run-up was enticing more investors to the US$7.4 trillion market. China added 2.02 million new equity investors in March, bringing the total tally to 150.5 million. That exceeds the total number of the almost 90 million members the Chinese Communist Party boasts, and is close to the entire population of Bangladesh.
Telecom and banking stocks led the pack of gainers on Tuesday. Telecom equipment maker ZTE surged by the 10 per cent daily limit to 33.55 yuan after data from the regulator overseeing state-owned assets showed China’s investment in the fifth-generation wireless networks increased by 40 per cent in the first quarter. Wutong Holding Group also jumped 10 per cent to 5.01 yuan and Aurora Optoelectronics 10 per cent to 5.57 yuan.