China index jumps to another record

Analysis

China’s benchmark stock index roared to another record close despite the central bank’s latest interest-rate increases.

Airlines and insurers helped lead the way, on expectations of strong earnings. Bargain-hunting in steelmakers in anticipation of more mergers in the sector also contributed to the market’s strength. The benchmark Shanghai Composite Index, which tracks both Class A and Class B shares, ended up 2.1% at 5421.39 in moderate volume, surpassing the previous record of 5412.32 last hit September 6.

The index is now up an astonishing 102.13% for the year to date. With investor cash remaining ample, the Shanghai index could test its immediate psychological resistance at 5500 within this week, with 5600 the next target. “Friday’s rate hikes have had no impact on the market’s bullish sentiments whatsoever,” said She Minhua, an analyst at Huai Tai Securities. „Especially with the entry of the newly established funds, there is just so much money sloshing around, chasing after relatively inexpensive stocks and sectors whose profit outlook benefits from interest rates.”

Despite the rate increases, China’s stock market remained buoyant as investors chose to look at the benefits that higher interest rates would have on certain sectors, including the aviation industry. Shares of China Eastern Airlines surged by the 10% daily trading limit, while Shanghai Airlines rose 8%. Insurers also received a boost from the rise in interest rates. China Life rose 3.3% while Ping An Insurance climbed 2.2%. Steel stocks rose again, as cash-rich investors bought shares on cheap valuations and expectations of further consolidation in the industry. Handan Iron & Steel hit the 10% upside limit. Inner Mongolian Baotou Steel rallied 9.96%. (Tokyo takes break; London declines)

ADVERTISEMENT

Latvia producer price inflation surges in May Figures

Latvia producer price inflation surges in May

Lawmakers approve 2022 budget Parliament

Lawmakers approve 2022 budget

Breast cancer screening at Dr. Rose Private Hospital Interview

Breast cancer screening at Dr. Rose Private Hospital

Budapest launches revamped coupon card for visitors City

Budapest launches revamped coupon card for visitors

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.