Recently, China's stock market has experienced a shocking rebound, all thanks to a series of economic stimulus measures launched by the government. With the strong rise in the stock market, some market analysts have observed that speculators may be withdrawing from the cryptocurrency market and investing in the A-share market in mainland China. This shift not only affects the trend of the cryptocurrency market, but may also have a far-reaching impact on the global market.
Since last week, the Chinese government has announced major economic stimulus measures. In addition to injecting capital into the stock market, it has also tried to save the housing market. The People's Bank of China first cut the reserve requirement ratio by 2 basis points, releasing about 1 trillion yuan of liquidity to the financial market, and lowered the 7-day reverse repurchase operation rate by 0.2%. Then it lowered the interest rate on existing mortgage loans. Shanghai and Shenzhen even announced the relaxation of some housing purchase restrictions, and Guangzhou completely lifted the restrictions.
China has launched a series of economic stimulus measures, driving a sharp rebound in the stock market. At the latest closing of the Chinese stock market, the three major A-share indices soared again. In terms of indexes, the Shanghai Composite Index closed at 3336.50 points, up 8.06%, setting a new record for the largest single-day increase since October 2008. The Shenzhen Component Index, the ChiNext Index, and the Beijing Stock Exchange 50 Index closed up 10.67%, 15.36%, and 22.84%, respectively, all setting new records for the largest single-day increase in history.
In terms of trading volume, the total trading volume of the Shanghai and Shenzhen stock markets today was 2.59 trillion yuan, surpassing the 2.36 trillion yuan on May 28, 2015, setting a new record for the largest single-day trading volume in history. Among them, within 35 minutes of the opening of the morning, the trading volume of the Shanghai and Shenzhen stock markets exceeded 1 trillion yuan, setting a new record for the fastest breaking of one trillion yuan in history.
In terms of sectors, the three leading industries today were beauty care, computers, and electronics, with the corresponding industry indexes rising by 13.53%, 13.24%, and 12.94%, respectively, all setting new records for the largest single-day gains in their respective industries.
In terms of individual stocks, 5,336 stocks closed higher, with only 8 stocks falling, setting a new record for the most stocks that rose; 713 stocks closed at the daily limit, setting a record for the most daily limit since October 2015. Many stocks such as Eastmoney, Kweichow Moutai, and Yangtze Power set new records for the largest single-day trading volume in history.
Meanwhile, as Chinese stocks have surged in response to the news, Wall Street is beginning to feel the fear of missing out (FOMO). In a note to clients, Goldman Sachs technical strategist Scott Rubner noted that the Chinese stock market is on a roll and could now surge further as international investors begin to pile in.
International investors have largely not participated in the rally in Chinese stocks so far, making this rally a "painful trade" for foreign investment managers that have previously been short Chinese stocks. Given the low percentage of investors holding Chinese stocks before, investors who missed the rally are accelerating into the market, and FOMO has begun. After the US election, Chinese stocks should become a hot trading target for investors in November and December.
In this regard, David Tepper, a well-known Wall Street bargain hunter and founder of Appaloosa Management, said that he is increasing his holdings of Chinese concept stocks. China's economic stimulus policies have exceeded expectations, and investment indicators are underestimated, which are reasons for buying.
However, some institutions hold different opinions. Phillip Wool, head of portfolio management at Rayliant Global Advisors, believes that the stimulus measures are mainly to inject liquidity into the market, but the current situation is that more liquidity alone cannot achieve the sustained recovery that long-term investors want to see. As long as demand remains as weak as before, no one will be willing to borrow, and such measures will not produce the expected results. At the same time, Gary Tan, portfolio manager at Allspring Global Investments, also said that investors will only invest new funds if there is a fundamental change in the deflationary outlook and the housing market.
It is worth noting that with the strong performance of the A-share market, many speculators in the cryptocurrency market have begun to turn their attention to mainland stocks. The latest analysis report from 10xResearch shows that Bitcoin's short-term technical indicators are in an overbought state, indicating that it may fall. Therefore, speculators may have turned from cryptocurrencies such as Bitcoin to Chinese stocks in search of higher volatility and returns.
Over the past period of time, the cryptocurrency market has faced many uncertainties, including changes in regulatory policies and fluctuations in market sentiment. These factors have caused many investors to lose confidence in cryptocurrencies and look for other investment opportunities. The rebound in the Chinese stock market has provided these speculators with a new investment channel, especially with the support of the current economic stimulus policy.
However, cryptocurrencies still have their own unique appeal. The price volatility of major cryptocurrencies such as Bitcoin remains high, and there is still a possibility of a rebound in the short term. The market is undergoing some major changes, and although there are obvious short-term concerns, the larger trend may soon overshadow these concerns.
In summary, the government's economic stimulus policy has effectively boosted market confidence and attracted a large amount of capital to flow into the A-share market. In this process, the flow of speculators' funds has also changed, from the Bitcoin market to Chinese stocks, showing the market participants' pursuit of high volatility.
In the future, as policies continue to be implemented and the market continues to evolve, whether the Chinese stock market can maintain this growth momentum and its impact on the global market will be a focus of attention. In this market environment full of variables, investors need to remain vigilant and flexibly adjust their strategies to cope with potential market fluctuations.
