EDITOR NOTE: China’s stock market may still be far from rivaling the US market cap, but its achievement of a $10 trillion market value is certainly an achievement for the “communist” country (that last comment, goes not without irony). Similar to how the sleeping giant crept up on the western world, starting in the 1990s, there’s no doubt that it will do the same in the equity markets in the coming years.
Chinese domestic equities are worth more than $10 trillion for the first time since 2015, when a record crash erased half the market’s value in months and saddled millions of investors with losses.
The world’s second-largest stock market has added $3.3 trillion since a low in March, helped by Beijing’s policies to encourage trading, a flurry of new listings that arrived with eased rules and the strengthening yuan. Stocks have been close to the $10 trillion milestone since July, when China’s government acted to tame a speculative rally that had suddenly pushed a gauge of large caps near a 12-year high.
The country’s total market capitalization is now $10.04 trillion and just shy of the all-time high, according to data compiled by Bloomberg as of Monday.
“It’s a meaningful number, especially coming after a pause in the stock rally,” said Hao Hong, chief strategist for Bocom International in Hong Kong. “It’s possible China’s market value can expand faster now that market reforms like the registration-based IPO system are in place.”
The U.S. has the world’s most valuable equities market at $38.3 trillion. Japan is No. 3 at $6.2 trillion, and Hong Kong’s is worth $5.9 trillion. The U.K. has the world’s fifth biggest market at $2.8 trillion.
Chinese shares rallied after a long holiday break on optimism the government will introduce reforms to turn the region around Shenzhen into a global technology hub and that the ruling Communist Party will introduce policies to stimulate demand when it holds a major meeting later this month. Equities surged over the summer as margin debt climbed at the fastest pace since 2015 and turnover soared.
The CSI 300 Index of key stocks listed in Shanghai and Shenzhen rose 0.3% at the close on Tuesday. It’s gain of 18% this year tops the world’s major benchmarks.
Originally posted on Bloomberg