China's A-share market has rallied over the past fortnight, with trading volumes reaching unprecedented levels as retail and institutional investors alike pour into equities. The benchmark Shanghai Composite Index climbed 8% during this period, fueled by renewed optimism about economic recovery and strategic sector growth.
While the surge reflects growing confidence, analysts caution that market sustainability depends on Beijing's next policy moves. James Wang, head of China strategy at UBS Investment Bank, told KhabarAsia: "Investors are pricing in expectations of targeted stimulus, particularly in advanced manufacturing and green infrastructure. The focus now shifts to July's Politburo meeting for clearer direction."
Market observers note three key drivers behind the rally: improved export data from the Chinese mainland, breakthroughs in semiconductor manufacturing, and relaxed margin requirements for stock trading. However, concerns linger about uneven consumer spending and potential overvaluation in tech stocks.
For global investors tracking Asia's $18 trillion equity markets, the developments highlight both opportunities and risks. "Sectors aligned with China's innovation-driven development strategy remain attractive long-term plays," Wang added, citing renewable energy and AI-related industries as areas likely to benefit from policy support.
As cross-border capital flows into Chinese markets hit a 2024 high, financial authorities have maintained a cautious stance. Analysts suggest potential measures could include interest rate adjustments and expanded tax incentives for strategic industries.
