On Monday, trading on China’s two main stock exchanges hit a record high, with a total volume of 3.6 trillion yuan, or $516 billion. The total surpassed the previous high of 3.46 trillion yuan, set on October 8, 2024, when markets first reacted to major policy developments.Â
For the first time in almost a decade, the Shanghai Composite Index crossed the 4,000-point threshold last week. With gains of about 9% from their December low, markets have been rising for more than three weeks.
The Shanghai index has finished above its opening price for 16 days in a row, a peculiar trend that Chinese news outlets have highlighted. Since the early 1990s, this has been the longest victory streak.
Shift in investor behavior
Early in the rally, government-linked funds and large insurance firms drove prices up by buying funds that follow the A500 Index. However, market watchers say the buying has changed.
Now it’s coming more from regular investors jumping in because they don’t want to miss out, along with big institutions betting that company profits will grow by 14% in 2026, according to Goldman Sachs estimates.
Technology stocks are leading the way up. Semiconductor companies, artificial intelligence firms, and drug makers developing new treatments have seen the biggest gains. Insurance stocks have also climbed significantly.
Central bank support expected
Investors expect the central bank to keep money flowing easily through the rest of 2026. The People’s Bank of China recently indicated it will cut the amount banks must hold in reserve and reduce interest rates to keep cash available. With around 7 trillion yuan sitting in household savings accounts and the real estate market struggling, many expect stocks to keep rising as people look for better places to put their money.
