The Chinese organizer is the next booming stock market catalyst
The Chinese stock market is crying supported by state money and large institutions, and analysts say the absence of euphoria of retail investors shows that general meetings have legs even when economic recovery struggles to collect speed.
The Shanghai Composite Index 000001 benchmark has risen by a quarter since April and at the highest 10 years, in contrast to the Chinese economy which remains mired in the property crisis, weak consumption and spiral deflation.
Analysts are bullish, noting how general meetings have been encouraged so far, especially by sovereign funds, insurance companies and other institutions, and the initial signs of the purchase of retail investors.
“Stocks can rise even in slowing economies” Because fresh inflows can raise the assessment, said Chen Haagi, a fund manager based in Shanghai at the Leader Capital.
“The effect that makes money has just appeared. If you look around, not everyone is itchy to buy shares. The mood has not boiled so we can be a little bolder.”
Chinese households are reluctant to spend or invest in an economy that struggles to sit with a record of 160 trillion yuan ($ 22.33 trillion) Savings – three times the size of a decade ago and is worth 60% more than the total value of the mainland stock market.
But some of the cash moved from the bank and to a trading account. Individual deposits shrink 1.1 trillion yuan in July, while deposits in non-sacrificial financial institutions jumped 2.1 trillion Yuan.
“Our clients move money from deposits and bonds because interest rates continue to fall,” said Max Gu, a manager at Citic Securities outlet in Shanghai.
Among those who want to measure the flow of potential into stock, Kaiyuan Securities estimate the retail deposit of 2.1 trillion Yuan mature this year and the next and now can flow to stocks and funds with higher results. Sealand Securities estimates that the Retail Dry Powder 1.84 trillion Yuan.
Treasuries of 10-year China now produce around 1.7% while banks offer interest rates of less than 1% for a one-year deposit. The Bluechip CSI300 3399300 index provides a dividend result of around 2.5% even after the new rally.
“At some point, the stock market rally can attract new investors and new funding, producing a process that satisfies itself,” Nomura Analyst said in a report.
Boom has a firm stomach
Boom in the stock price has attracted parallel to 2015, when a similar economic condition spurred policy easing and market surge, only to result in disappointment and accident a year later.
This time is different, the analysts said, noting that while the economy was struggling, money pursuing shares was long -term and institutional, rather than retail loans that rushed quickly to get out in 2015.
The general meeting appeared to be resilient, the fund manager and analyst said, supported by funds supported by the state, trust in artificial intelligence firms, Deepseek’s success, and a ceasefire in the bruising Sino-As trade war.
However, the difference between the weakening of the economic fundamentals and the increasing excitement of investors create a dilemma for policy makers who seek to stimulate the economy without fanning the stock market bubble. Broad -based weaknesses in July data show that the economy continues to slow down.
Beijing may need to step carefully in the next few months because “launching pro-growth steps can fan fire and expand the stock market bubble,” Nomura said. “However, not doing anything that risks to worse slow growth.”
Citic Gu said there were some signs of retail madness. “A lot of funds are still under water, and many investors are still licking their wounds.”
The Shanghai Stock Exchange data shows 1.9 million new retail accounts opened in July, much smaller than 7 million per month during the 2015 market boom.
The change of trade in China’s daily stock has exceeded 2 trillion for 11 consecutive sessions, the longest record. The margin financing balance has reached a decade of 2.1 trillion Yuan.
But margin trade contributed only 2.2% of the capitalization of the Chinese floating market, half of the level in 2015, when the market was much smaller.
“There are still some shortcomings in the economy that blocks more aggressive positions in the overall market,” said Homin Lee, a strategist based in Singapore at Swiss Private Bank Lombard Odier.
“If you only focus on 2025, it looks interesting. But if you see a longer history, it has become a terrible investment for investors.”
Source: Reuters
