An investor checks stock prices at a brokerage in Nanjing, East China's Jiangsu province, July 6, 2020. (Photo: Sipa)
The major indexes at the Chinese A-share market continued their upward trend on Monday, with the Shanghai Composite Index registering its biggest oneday gain in five years to close at 3,332.88, the highest level since March 2018, and the Shenzhen Component Index gaining 4.09 percent to 12941.72.
The combined turnover of the two bourses reached 1.56 trillion yuan ($222.2 billion), a five-year high, with banking, insurance, securities and other financial stock prices taking the lead. Despite some irregularities being exposed in the A-share market in recent years, the Chinese stock market has been making progress, not only because of the stricter regulatory measures taken by the authorities, but also because of the increased efforts to integrate China's capital market to the world through the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Shanghai-London Stock Connect.
China has also set up a science innovation board, and made great efforts to push for reforms, further consolidating its capital market. China's capital market is now of global influence, as indicated by the inclusion of A-shares into the Morgan Stanley Capital International Index. Given that China's real economy cannot stay delinked from its capital market for long, it is not surprising to see the country's A-share market surge after a protracted recession. As the main board, the A-share market more truly reflects the fundamentals of the Chinese economy, and so its recent boom will inject confidence into the overall domestic market and provide investors with a good opportunity to create wealth.
With the novel coronavirus pandemic still raging worldwide, the good news in China's A-share market will bring some optimism to the anxious global market.
While countries around the world are still tinkering with the idea of restarting their economy, China has become the first major country to bring the pandemic largely under control and resume work and business. According to the International Monetary Fund, the global economy may shrink by 5 percent this year, and the United States, Europe, Japan and India will all see negative economic growth. Therefore, the positive economic growth that China is likely to see offers support for its A-share market.
A series of strict regulatory and institutional measures taken by China's securities regulator in recent years have eliminated many risks in China's A-share market. In addition, the opening-up and innovation of China's capital market, especially the establishment of science and innovation boards outside the main board has also boosted investors' confidence in its capital market. At a time when the global market is full of uncertainties, a strong A-share market will not only boost confidence in the Chinese economy but also inject hope into the global market.