Chinese stock markets wrapped up the last trading day in the Year of the Rat with favorable gains, sending the Shenzhen Component Index and the Nasdaq-like ChiNext index to new highs in the past five years.
The benchmark Shanghai Composite Index ended the day 1.43 percent higher at 3,655.09 points, while the Shenzhen Component Index climbed 2.12 percent to 15,962.25 points. The ChiNext index also posted a strong gain of 2.39 percent.
A total of 2,457 shares posted gains while 1,385 shares saw losses on Wednesday. There will be a week-long Spring Festival holiday before the markets start trading in the Year of the Ox.
Electrified by a research note by CITIC Securities, which lifted its one-year price outlook for shares of China’s leading liquor brand Kweichow Moutai to 3,000 yuan ($466) per share from 2,601 yuan on Wednesday, the liquor sector staged a rally of 4.91 percent on Wednesday.
The CSI 300 index, which consists of the 300 largest and most liquid A-share stocks, shot up by 2.14 percent.
The CSI 300 scaled an over 13-year high on Wednesday since October 2007, according to Reuters.
The strong performance posted on Wednesday, the last trading day of the Year of Rat, is in stark contrast to the first trading day of that year, when investors were in panic amid news of the COVID-19 outbreak in China, which led to the Shanghai index plunging by 7.72 percent on February 3, 2020.
Despite the scary start, the Year of the Rat was a bullish year for the Chinese capital market, with the Shanghai index gaining 600 points.
For the year, the Shanghai index rose 19.43 percent while the Shenzhen index shot up 44.17 percent. ChiNext index performed even better, rising 71.21 percent.
Some investors interpreted the bullish performance on Wednesday as a good sign for trading in the upcoming Year of the Ox, which has a psychological connection with a bull market for many Chinese. They also cited Chinese economic fundamentals as a reason for their bullish view in first quarter trading.
China’s consumer price index, a main gauge of inflation, declined by 0.3 percent in January and the factory gate prices rose on year-on-year terms for the first time in a year.
The Chinese economy is forecast to grow 8.1 percent in 2021, while the global economy is expected to be up 5.5 percent, the IMF said in its latest World Economic Outlook in late January.
Stock market Illustration: VCG
