By Samuel Shen and Summer Zhen
SHANGHAI/HONG KONG (Reuters) – Animal spirits are back in China’s stock market as investors rush into equities, galvanized by Beijing’s policy bonanza and driven by fear of missing out on what some see as a rally of historic intensity.
Brokerages are bustling with retail clients and a burst of orders is jamming trading systems as investors rotate money out of bonds and deposits into stocks, leading to an explosion in stock turnover and a jump in yields.
“Deposit rates are too low, and real estate investment is no longer safe,” said 30-year-old office worker Darren Wang, who started buying stocks using borrowed money.
“There’s no other way to be rich other than redoubling bets on stocks. The market craze you see this time could be unprecedented.”
Stocks have endured three years of gloom as economic activity struggled to return to pre-pandemic buoyancy while a debt crisis among property developers rippled through markets.
That gloom suddenly turned into euphoria last week as the blue-chip CSI300 Index surged 16% for its best week since 1998, after the government announced a volley of stimulus including interest rate cuts and a $114 billion war chest to boost share prices.
Many of the policies are yet to be implemented and there is no guarantee they can fundamentally improve business conditions or cure economic illnesses, including the prolonged property crisis and anaemic consumption. Even so, investors said they are following the money.
“Life has been tough for so long and finally it’s time to make some money,” said Wen Hao, a manager at a tech startup in Hangzhou who bought energy stocks on Monday.
He drew parallels to the bull run of 2015 when Shanghai’s stock benchmark doubled in just six months, citing huge sums of “state-backed money on their way into the stock market”.
The central bank last week unveiled a swap program initially worth 500 billion yuan ($71.30 billion) to fund stock purchases by brokers, funds and insurers. It will also create a 300 billion yuan re-lending facility to fund share buy-backs by listed companies. Both…
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