On the last day of the trading week, Chinese investors continued to stock up on the blue chip stocks encouraged by the main stock index CSI300 growing 5 days in a row.
CSI300 (IND: SHSZ300), the leading stock index in China, has just closed its best week in almost 6 months, reported Reuters. The index has been growing for five straight days and reached its highest value in 11 months at 3,521.30 points. Likewise, Shanghai Composite Index (INDEX: Shanghai Stock Exchange Composite Index [SHCOMP]) recovered from a nearly 1% drop this morning and closed the day up 0.6% at 3,261.94 points. In the last 5 days, CSI300 gained 3% whereas Shanghai Composite jumped slightly more than 2%.
According to the analysts, the reason for such a positive performance is the growth of the Chinese economy that has been turning to stabilization in several sectors. If the positive trajectory continues, the experts predict further stock market advancements. Earlier this month, Chinese Premier Li Keqiang told Reuters that the country's economy was prepared to deal with its current challenges and could ensure steady growth in the months to come. Seems like three weeks later, his prediction is coming true.
The politician said that China was working to "rebalance" the economic situation in order to adapt to the changed environment resulting from slower domestic and foreign growth. The third quarter economic growth in China was at 6.7%, which is slightly better than the second quarter performance, but the issues of rising property prices and governmental spendings are still there.
Reuters adds that the Chinese stock market becomes increasingly attractive to "yield-seeking" investors because of the volatility in the housing, futures and bond markets. During this week, investors' outstanding margin financing has grown by 50 billion yuan from last month and reached the highest level since 2015.
If the stock market continues to grow the next weeks, it could well close the year with the best 12-month performance.