China’s world-beating stock market tops US$10 trillion for first time since 2015 as economy shakes off Covid-19 pain

Economic recovery and success in containing Covid-19 have lifted the combined market caps of Chinese stocks to new threshold

China’s market capitalisation briefly surpassed US$10.05 trillion in 2015 before the bubble burst

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People enjoying a light show at the Bund in east China's Shanghai during the “golden week” holiday from October 1 to 8. Photo: Xinhua

Published: 10:21am, 13 Oct 2020Updated: 10:42pm, 13 Oct 2020

China’s world-beating stock market has exceeded US$10 trillion in total capitalisation for the first time since the infamous rout in 2015, with the benchmark gauge topping all major global equity indexes as the government brought the coronavirus pandemic under control.

The combined values of shares trading on the Shanghai and Shenzhen exchanges reached US$10.04 trillion on Monday, according to Bloomberg data. The market value briefly touched US$10.05 trillion in June 2015, the only other time it has reached the threshold, before a catastrophic meltdown erased half that value in the subsequent three months.

The ascent follows a back-to-back rally after the market resumed trading after the “golden week” holiday, with emphatic gains over the past two trading days. The surge has some merits this time, as the world’s second-largest economy became the first to lift the virus lockdown. It is also the first so far to rebound from a contraction, as the US and Europe struggle with a resurgence of infections.

This week’s trading could keep the US$10 trillion mark intact if the bulls keep up to the roaring start to the week. Much of the optimism is tied to President Xi Jinping’s planned visit to Shenzhen on Wednesday, with eyes on his policy address to mark the city’s 40th anniversary as a special economic zone.

China’s market is now the world’s second-largest behind the US, which is capitalised at US$38.3 trillion. Japan and Hong Kong are ranked third and fourth, with market caps of US$6.2 trillion and US$5.9 trillion respectively.

China’s economy returned to growth in the second quarter with 3.2 per cent expansion, bouncing back from a 6.8 per cent decline in the previous three-month period. Gross domestic product likely expanded by 5.2 per cent last quarter, according to the market consensus. The GDP report is due on October 19.

While the listed companies still posted a decline in second-quarter earnings, the decrease significantly narrowed from that in the first three months and analysts estimated full-year growth would return to positive territory.

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