China’s stock market closes at highest level since 2008 financial crisis
China’s stock market has soared to its highest level since the 2008 financial crisis as the world’s second-largest economy mounts a rapid recovery from the coronavirus pandemic.
The CSI 300 index, which tracks the value of the biggest companies on the Shanghai and Shenzhen stock markets, closed up 1.9% on Tuesday at 5,368 points – the highest level since January 2008.
Narrowly surpassing a level of 5,353 reached in 2015, when fears over a hard landing for China’s economy after years of blockbuster growth led to a sell-off in shares, the fresh landmark stands as the latest dramatic turnaround in global financial markets since the onset of the coronavirus pandemic.
It comes as China’s economy stages a faster recovery than expected at a time when other nations around the world are still grappling with rising infections and severe disruption to business and social life caused by the pandemic.
As the nation at the centre of the initial Covid-19 outbreak, Chinese GDP fell for the first time in four decades in the opening months of 2020. However, many analysts believe harsh controls to contain the spread of the disease helped to lay the ground for a faster return to relative normality.
China avoided the technical definition of a recession last year – two consecutive quarters of falling GDP – with a return to growth in the three months to June as it rolled back lockdown restrictions.
After recording growth of just 1.9% for 2020 as a whole – the lowest level for 30 years – the International Monetary Fund expects China’s economy to grow by more than 8% in 2021, dramatically outpacing the recovery in many other countries.
Nigel Green, the chief executive of deVere Group, an investment management firm, said the gains on the Chinese stock market reflected its rapid recovery. “China’s rebound is quite remarkable, compared to other major economies, many of which are once again rolling out stricter restrictions to stop the spread of Covid amid a tsunami of new cases.”
“China’s already impressive economic recovery is likely to pick up momentum and this will be extremely attractive. But as 2020 showed us with perhaps too much clarity, things can change quickly and so-called ‘certainties’ can shift overnight,” he said.
The fresh landmark for the Chinese stock market came on a day of choppy trading on the London stock market, with the FTSE 100 closing up 0.6% at 6,612, after recording modest losses earlier in the day amid concerns over the economic impact of the third Covid lockdown in England.
There are however hopes for a stronger economic recovery in Britain once more people receive vaccinations, which could propel the blue-chip index higher. Joshua Mahony, senior market analyst at the financial trading firm IG, said: “The swift nature of the vaccination process should ensure that any lockdown-fuelled weakness will be greeted by buying pressure as we look towards a March reopening.”
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