“It’s a meaningful number, especially coming after a pause in the stock rally,” said Hao Hong, chief strategist for Bocom International
in Hong Kong. “It’s possible China’s market value can expand faster now that market reforms like the registration-based IPO system are in place.”
The US has the world’s most valuable equities market at $38.3 trillion. Japan is No. 3 at $6.2 trillion, and Hong Kong’s is worth $5.9 trillion. The UK has the world’s fifth biggest market at $2.8 trillion.
Chinese shares rallied after a long holiday break on optimism the government will introduce reforms to turn the region around Shenzhen into a global technology hub and that the ruling Communist Party will introduce policies to stimulate demand when it holds a major meeting later this month. Equities surged over the summer as margin debt climbed at the fastest pace since 2015 and turnover soared.
China has added a new stock venue since 2015, with the Nasdaq-style Star market launching in Shanghai in July last year. Regulators waived rules on valuations and debut-day price limits for shares on the board. In August this year, a batch of 18 firms traded for the first time on the ChiNext Index under so-called registration-based initial public offerings, surging by an average 212 per cent by the close.
Meanwhile, Chinese internet stocks will keep outperforming their US counterparts in the months ahead as regulatory challenges to America’s technology giants mount in Washington and Brussels, according to some investors.
Their reasoning includes expectations that weakening the U.S. megacaps will help bolster the relative attractiveness of Chinese technology companies, which are continuing to invest in areas of growth. Meantime, the growing uncertainty over prospects for the US sector could send buyers to their cheaper Chinese peers which are still being championed by the government in Beijing.
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