BEIJING: While the surge of Chinese domestic artificial intelligence companies has led to upbeat sentiment in the A-share market recently, the inflow of more long-term and patient capital and improving fundamentals will be the major driver of the market’s bullish performance in a more sustained manner, said experts.
Although the benchmark Shanghai Composite Index and Shenzhen Component Index declined 0.42 percent and 0.77 percent, respectively, on Thursday, trading remained vibrant, as the combined trading value at the Shanghai and Shenzhen bourses topped 1.8 trillion yuan ($250 billion), up 5.9 percent from a day earlier. This marked the 17th consecutive trading day that the trading value stood above the 1-trillion-yuan level.
Zhang Jiqiang, head of the research institute of Huatai Securities, said that trading capital in the A-share market has increased significantly since Spring Festival. The activity level of financing transactions has reached a new high since mid-November. The net inflow of retail funds exceeded 40 billion yuan from Feb 5 to 7, the highest level since mid-November.
The performance of property developers, which are market heavyweights, was worth noticing on Thursday when the A-share market fluctuated. The sector rallied for the second consecutive day by 0.79 percent. These companies have seen their prices rise 6.3 percent since trading resumed on Feb 5 after the Spring Festival holiday.
This can be largely attributed to the progress that leading property developers have made in addressing their debt pressures.
Shenzhen-based China Vanke announced on Monday that Shenzhen Metro, its largest shareholder, plans to provide a 2.8-billion-yuan loan, with which Vanke will repay debt in the open market. Country Garden, another major developer, said on Jan 9 that it has proposed a deal to restructure offshore debt worth $10.3 billion, providing its creditors with multiple options including converting debt into cash and extending the maturity. At the end of November, Sunac China Holdings proposed restructuring plans for 10 debts in the onshore market, of which eight have been supported until now. –The Daily Mail-China Daily news exchange item
