Shanghai Stock Exchange rises more than 20% since April

Trading volume also exceeds 2 trillion yuan for 5 consecutive sessions

The Chinese stock market is showing a strong rally.

On the 20th (local time), the Shanghai Composite Index rose 1.04% from the previous day, closing at 3,766.21. Shenzhen was up 0.89%, and the Hang Seng Index in Hong Kong also rose by 0.17%.

Trading volume continued to increase, with turnover on the Chinese stock exchanges surpassing 2 trillion yuan (about ₩390 trillion) for the fifth consecutive trading day as of the day before. The CSI 300 Index of the Shanghai Stock Exchange gained about 4% over the past three weeks.

Stock margin lending to buy shares also surged. Last week, the size of margin loans for stock purchases on the Shanghai Stock Exchange hit its highest level since 2015.

The Shanghai Composite Index has climbed 22% from its April low, when President Trump of the United States announced mutual tariffs, boosting risk appetite. The upside has been extended even though individual investors have yet to participate in large numbers.

At the start of this year, gains in the Chinese stock market were concentrated in specific sectors such as bank stocks bought up by insurers targeting AI and dividends. There were also rallies in September and October last year in anticipation of the Chinese authorities’ economic stimulus announcements, but these did not last.

According to Bloomberg, the current rally is strengthening confidence in the market as the vast majority of stocks in the indices are in an uptrend.

This week, the proportion of stocks reaching 1-year highs on the Shanghai and Shenzhen exchanges (excluding last October) has hit its highest level since 2021 and 2020, respectively. The upswing is broad-based, with about 90% of all index components trading above their 50-day moving averages.

Of the approximately 5,700 stocks traded on the Shanghai and Shenzhen exchanges, more than 2,000 showed gains yesterday. On average, over the past three weeks, more stocks rose than fell.

The Chinese government is introducing policies to support Chinese investment in stocks amid a lack of signs of recovery in the real estate market. China stated that it would strengthen tax oversight on overseas share trading income and subsidize interest payments on qualified personal consumer loans.

The Shanghai Composite Index recorded 5,166 points before the bubble burst in 2015.

Kim Jung-ah, special correspondent kja@hankyung.com