China’s stock benchmark is set to close above its 2015 bubble high for the first time, marking a recovery from one of the country’s worst equity crashes.
The CSI 300 Index rose as much as 1.7% on Tuesday, surpassing the 5,353.75-point close from June 8, 2015. That would be its highest close since 2008. The gauge has surged more than 50% since a low in March last year, a rally that accelerated after Beijing made it easier to buy stocks using borrowed money. That advance helped push the value of China’s domestic to a record $11 trillion.
China’s stock benchmark outpaced MSCI Inc.’s global benchmark by the most in six years in 2020, with savers funneling cash into thousands of new stock funds after some popular wealth products suffered their first-ever losses. The bullishness was reinforced by a strong currency, as well as data showing China’s economy was rebounding faster than other major economies from the virus pandemic.
After Chinese stocks peaked in 2015, a tumble over the next three months erased more than $5.2 trillion in value as sellers scrambled to liquidate margin trades. Policy makers took some steps to slow the rally in July last year, after a sudden rally and a surge in turnover invited comparisons to the start of China’s last stock bubble.
This time the gains will be more sustainable, according to analysts. Citigroup Inc. analysts including Pierre Lau raised their target for the CSI 300 Index to 5,525 points, while Morgan Stanley analysts including Laura Wang set a year-end target of 5,570 for the gauge.