BEIJING — Boosted by ample liquidity and strong confidence in the economy, Chinese stocks climbed above 4,000 points, a key psychological resistance level, for the first time since early 2008.
The fresh seven-year high of Shanghai Stock Exchange was reached despite an upcoming wave of new share offerings which will reduce liquidity.
China’s security regulator last week approved 30 initial public offerings (IPOs), which could lock up as much as 3.7 trillion yuan ($596 billion) in subscription funds over the next two weeks.
Analysts attributed the booming market to ample liquidity. Combined daily turnovers on the Shanghai and Shenzhen bourses has remained above one trillion yuan for the past two weeks.
To bolster the lukewarm real economy, the central bank has cut the benchmark interest rates twice and banks’ reserve requirement ratios (RRR) once since November of 2014.
The bullish market also stems from confidence in the Chinese economy as reform of state-owned enterprises and the financial sector speeds up.
Heavyweights led the booming market, as PetroChina, the country’s largest oil and gas producer, jumped 3.34 percent to 12.68 yuan per share by 14:00, and China’s leading insurer Ping An Insurance jumped 3.48 percent to 83.85 yuan per share at 13:30.
The high-speed rail sector expanded by more than 3 percent. China’s high speed rail manufacturers China North Railway (CNR) and China South Railway (CSR) rose by the daily limit of 10 percent, as their merger progresses.