Source: Global Times Published: 2020-03-02
China's stock market staged a strong rebound from Friday's massive sell-offs on Monday, which experts said could herald global markets' recovery following last week's rout on rising COVID-19 epidemic fears.
The experts predict that China's equities market, supported by the country's strong economic fundaments, may in the coming months act as a global capital market stabilizer.
The Shanghai Composite Index surged 3.15 percent and stopped just short of the 3,000-point mark on Monday, reversing much of its loss on Friday when the market bent to pressure from panic sell-offs around the world.
The smaller Shenzhen Component Index rebounded 3.65 percent, while the ChiNext recovered by 3.08 percent.
"The Chinese equity market is the world's third-largest, and its upbeat performance will be a major shot in the arm for Wall Street," said Wang Wen, executive dean of Chongyang Institute for Financial Studies at Renmin University of China.
Wang estimated that it is possible that the US stock markets finish in positive territory on Monday.
Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said the Chinese A-share markets will spearhead a rally of global stock markets including the US and European markets.
The global markets were seized by panic last week over the spreading coronavirus epidemic into South Korea, Iran and Italy. In the past 24 hours, the US also saw mounting infection cases. Two patients have died of the disease in the western state of Washington.
Now a trendy correction seems to take hold on those markets and they need just a "beacon" to rebound, Li said. "The A-share market, which rallied strongly despite continuous falls in some markets, is sending a light." He added that overseas mood will be spirited by the A-share market's performance.
Led by infrastructure builders and property developers, the Chinese A-share market was undeniably the market darling in East Asia on Monday, far outperforming the Nikkei's 0.95 percent gain and the 0.81 percent rise of Hong Kong's Hang Seng index.
As of Monday's close, the combined turnover of the Shanghai and Shenzhen stock markets has exceeded 1 trillion yuan ($143.5 billion) for the ninth consecutive trading session.
How the US and European markets would go depends on the progress of the coronavirus outbreak, and corrections will happen again if the epidemic worsens further, Li said.
"But the A-share markets will keep solid, not only because the coronavirus is on the wane in China but also because of A-shares' lower valuations, the entrance of long-term investment capital and market expectations for a strong wave of policy stimulus," Li said.
An independent upward trend has been formed for A-shares and investors are confident that the COVID-19 outbreak won't have a protracted impact on the Chinese economy in the long run, said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co.
Wang Wen is professor and executive dean of Chongyang Institute for Financial Studies, at Renmin University of China.