Since October 13, 2020, the Chinese stock market value has surpassed Shs10 trillion, the first time to hit that mark since 2015 when it crashed to more than half its prior value leaving investors with massive losses.
According to Bloomberg, the Chinese stock market value grew steadily since March this year adding $3.3 trillion. This growth is attributed to the Chinese government’s policies that have encouraged trading, and the entry of new companies on the stock market due to the reformed registration-based Initial Public Offering (IPO) system.
A total of 18 new companies were listed on the ChiNext Index for the first time under so-called registration-based initial public offerings, and their entry led to an average surge of 212% by the close.
Bloomberg notes that the market value of Chinese stocks has been knocking on the door to hit the $10 trillion mark since July this year ever since China’s government acted to tame a speculative rally that had suddenly pushed a gauge of large-cap corporations near a 12-year high.
This milestone means that the Chinese stock market, which is the second-largest in the world after the US, is now worth $10.04 trillion.
The Chief Strategist of Bocom International in Hong Kong, Hao Hong predicts that the new market reforms concerning registration-based IPO will be a key catalyst in the expansion of the Chinese stock market.
“It’s a significant number, especially coming after a pause in the stock rally. It is possible [that] China’s market value can expand faster now that market reforms like the registration-based IPO system are in place,” Hao said.
There is optimism that the Chinese government will restructure the Shenzhen region into a global technology hub, coupled with increased market demands due to favourable government policies. It is reported that Chinese stocks surged over the summer as margin debt climbed at the fastest pace since 2015 and turnover soared.
Last year in July, China launched a new stock venue in Shanghai, the country’s biggest city and global financial hub, and the CSI 300 Index of key stocks listed in both Shanghai and Shenzhen rose by 0.3% by the close of business on Monday. Its gain of 18% this year tops the world’s major benchmarks.
another factor that led to the growth of the Chinese stock market value is the strength of the country’s currency, the Yuan. Bloomberg reports that it rose by 3.9% in the last quarter, a record high since 2008.
The top five largest stock markets in the world are:
- The U.S. –$38.3 trillion
- China – $10.04 trillion
- Japan – $6.2 trillion
- Hong Kong – $5.9 trillion
- The U.K. – $2.8 trillion.