China’s stock market indexes recuperate from coronavirus shock, boosted by government’s containment and stimulus policies
- Shanghai and Shenzhen benchmarks have recouped all the lost ground in the sell-off triggered since February 3 amid outbreak
- Stocks are propped up after unprecedented measures to contain the viral outbreak and policy stimulus
As far as China’s stock markets are concerned, the coronavirus outbreak did not happen. Analysts credited the state’s unprecedented containment measures and policy stimulus for limiting the sell-off to a one-day affair.
The Shanghai Composite Index and the Shenzhen CSI 300 Index, which track the nation’s biggest companies, have clawed back all the losses since the markets slumped by about 8 per cent on February 3. Even more impressive, the ChiNext gauge of small-cap technology companies in Shenzhen surged to a three-year high in that span.
The People’s Bank of China turned on the tap by lowering the reserve requirement ratio and borrowing costs for lenders, while also pledging to widen access to funding for small businesses to mitigate the damage to the economy. The move fanned speculations on easing measures to shore up the property market.
“The risk appetite has been recovering quickly and the momentum on the market is telling us that the pandemic will be contained soon,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “The government has stepped up the monetary and fiscal policies to stabilise growth. All these efforts have contributed to the decent run-up.”
The Shanghai Composite rebounded to 2,975.40 points on Wednesday compared with 2,976.53 on January 23 before China’s onshore financial markets closed for the Lunar New Year holiday. The CSI 300 rose to 4,051.31 versus 4,003.90. Stocks crashed as much as 8 per cent on February 3 when they resumed trading.