Chinese stock markets reach new heights
July 7, 2020 Category China News Round-up, Weekly
The Chinese stock market has fully entered bull-market territory and the A-share market will see an upward trend amid some fluctuations in the second half of the year, analysts said. The market surged amid the fast resumption of China’s economic activities since the Covid-19 epidemic ebbed in the country. The benchmark Shanghai Composite Index closed up 2.01% at 3,152.81 on July 3, while the blue-chip CSI300 index climbed 1.93% to 4,419.60 points, its highest level since July 1, 2015. The smaller Shenzhen index rose 1.33% at Friday’s close, and the NASDAQ-style ChiNext board climbed 1.57%. The daily turnover of the Shanghai and Shenzhen bourses reached CNY1.17 trillion on July 3, an increase of CNY65 billion from the previous day. Yang Delong, Chief Economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times that consumption-related shares including wine, drinks and drugs have made significant gains in the first half of this year.
Shares of Chinese liquor firm Kweichow Moutai Co have become the most expensive in the Chinese mainland, surpassing CNY1,500 per share in June. The distiller has seen its shares soar about 1,350% in the past decade. Technology-related shares, including companies in the 5G and chipset sectors, also surged in the first half of the year, said Yang. “The conditions for the Chinese stock market’s entry into a new stage of development have matured, and a bull market is rising in the East,” said Li Daxiao, Chief Economist at Shenzhen-based Yingda Securities. “The second half of the year will see a slow bull market with an upward trend despite some fluctuations,” said Yang.
China’s A shares remained among the best-performing shares across global stock markets, analysts said. The Hong Kong stock market also continued its upward trend. The Hang Seng Index was up 0.99% at Friday’s close. The index has surged 3.55% last week, up more than 20% compared to its lowest point in March. Chinese tech giant Tencent, listed on the Hong Kong bourse, saw its shares rise 1.16% at the close on Friday, bringing its market capitalization beyond HKD5 trillion, the Global Times reports.
China’s Semiconductor Manufacturing International Corp (SMIC) plans to raise CNY46.29 billion in a Shanghai share sale, more than double its initial target. The offering values the company at 109.25 times its 2019 earnings, based on the expanded share base. Two big sovereign wealth funds, Singapore’s GIC Private and the Abu Dhabi Investment Authority, subscribed as strategic investors. Established in 2000, SMIC is the Chinese mainland’s top semiconductor foundry and competes with Taiwan-based TSMC, which has more advanced technology.
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