Chinese stocks posted their biggest daily surge in 16 years on Monday, with domestic A-shares posting their highest trading volume in history. Investors rushed into the market after Beijing announced a series of new stimulus measures. The CSI300 index surged nearly 30% from its February low, which by some market definitions signals the entry into a bull market, although most of the gains have come in the past few sessions.
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Many traders worried about missing out ahead of a long holiday helped push the CSI300 index up 8.5% by the close, with a five-day gain of more than 25%—the strongest in history. The benchmark Shanghai Composite Index also jumped 8.1% on trading volume of 1.17 trillion yuan. Its five-day gain since Tuesday was 21.4%, the most since 1996.
It was also the best daily percentage gain for the CSI and Shanghai Composite since 2008. The smaller Shenzhen index also surged 11% on trading volume of 1.4 trillion yuan. The sharp rally was fueled by aggressive stimulus measures announced by Beijing last week, including a major interest rate cut and fiscal support to prop up the sluggish economy.
Most notably, the People’s Bank of China introduced two new tools to support capital markets, one of which is a swap program that makes it easier for financial institutions to access funds to buy stocks. The move triggered a surge in Chinese stocks that had previously slumped to multi-year lows amid concerns about the country’s economic growth prospects.
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