China’s A-share market is likely to remain bullish this week, while stock performances may diverge, analysts said.
The benchmark Shanghai Composite Index surged by 2.68 percent to 2754.36 points on Feb 18, buoyed by a record high credit growth in January and signs of progress in trade talks.
The smaller Shenzhen index closed 3.95 percent higher at 8446.92 points. The ChiNext Index, China’s Nasdaq-style board of growth enterprises, soared by 4.11 percent to close at 1413.60 points, according to financial information provider Wind Info.
A total of 3,548 A shares went up, while only 15 stocks ended down on Feb 18, with securities firms and manufacturers of semiconductors and electronics equipment leading the rise.
The A-share market has shaken off last year’s downturn, with the Shanghai Composite Index up 10 percent as of Feb 18.
“As pressures on the market have been gradually lifted and capital inflow accelerated, we expect the market to maintain the uptrend this week,” said a report from the investment consultancy of Shenzhen, Guangdong province-headquartered Citic Securities on Feb 18.
Last week, foreign capital accelerated its flow into the A-share market, with the net inflow under stock connects hitting 28.37 billion yuan ($4.19 billion), according to information provider eastmoney.com. Meanwhile, the balance of margin trading saw a rapid recovery of 22.28 billion yuan, showing that investors with high risk appetite have entered the market.
The report further pointed out the broad rise driven by correction in valuation of the oversold market may be replaced by structural gains this week.
Wang Yi, chief strategy analyst with Shenzhen-based Great Wall Securities, agreed. “Companies with good financial performances and relatively certain growth prospects will continue their recovery, while those with worse fundamentals will probably see limited upward room,” Wang said.