Shanghai’s key stock index soars to 10-year high as investors pile in for higher returns
Investors shift to stocks out of fixed-income products as bond yields slump to record lows and deposit rates slide after cuts in borrowing costs
The Shanghai Composite Index advanced 0.9 per cent to 3,728.03 at the close, a level not seen since August 19, 2015. The CSI 300 Index climbed 0.9 per cent, finishing at the highest level in almost a year.
Shares worth 2.75 trillion yuan (US$382.9 billion) changed hands on the mainland’s exchanges, the most since October 9 when stocks rallied after the central bank unveiled a stimulus package to bolster equities and property prices.
The yield on China’s 10-year government bond increased 2.4 basis points to 1.771 per cent, the highest in four months. In Hong Kong, the Hang Seng Index slipped 0.4 per cent to 25,176.85, while the Hang Seng Tech Index added 0.7 per cent.
The widening breadth of the gains in stocks underscores the prevailing risk-on mood on the mainland’s markets. A key gauge on Shanghai’s technology board, a barometer of risk sentiment, surged 2.1 per cent, while a benchmark for start-ups in Shenzhen jumped almost 3 per cent. Telecoms and IT stocks were the best-performing industry groups on the broad-based CSI 300 Index, rallying at least 2.1 per cent.
“Bond yields and deposit rates are pretty low, while the wealth effect from the stock market continues,” said Amber Zhou, an analyst at Haitong International. “The rotation from bank deposits and bonds is expected to be ongoing.”