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AsianFin – Stock markets in the Chinese mainland climbed on Monday, pushing the Shanghai Composite Index to its highest level in a decade as investors shifted money from bonds and bank deposits into stocks in search of higher returns.
The Shanghai Composite Index rose 1.2% to 3,740.50 at mid-morning, a level last seen on August 19, 2015. The CSI 300 Index also gained 1.2%, nearing its highest close since September 2024. The move came alongside a modest rise in China’s 10-year government bond yield, which ticked up 2.7 basis points to 1.775%, a four-month high.
Since hitting a low of 3,040.69 on April 7, 2025, the Shanghai Composite Index has surged 22.7%. Over the same period, the Shenzhen Component Index rose nearly 30%, while the tech-heavy ChiNext Index soared 47%.
As of 10:34 a.m. Monday, China’s total A-share market capitalization exceeded 100 trillion yuan for the first time in history, according to the Securities Times.
On the company level, Agricultural Bank of China (ABC) leads the A-share market with a valuation of 2.19 trillion yuan, followed by Industrial and Commercial Bank of China (ICBC) at 2.02 trillion yuan. Four other major stocks—Kweichow Moutai, PetroChina, Bank of China, and CATL—each surpassed the 1-trillion-yuan market capitalization mark.
The recent market surge reflects growing optimism among retail investors, who are benefiting from near-record savings and gradually shifting funds away from bonds. Many of these investors still carry the scars of a decade ago, when a sharp market crash prompted Beijing to deploy state-backed funds to stabilize prices, leaving a lasting negative impression.
While there have been false starts since then, Chinese onshore equities have lagged behind global benchmarks in the U.S., Asia, and even Europe over the past ten years, earning a reputation as a weak spot for investors. Fund managers are now cautiously hopeful that the current rally—fueled by enthusiasm for artificial intelligence and government efforts to boost growth—can sustain itself over time.
China’s stock market has also benefited from a shift away from fixed-income investments, as investors lower expectations for further monetary easing and react to Beijing’s decision to resume taxes on interest earned from government and financial institution bonds.
On Monday, yields on China’s 10-year government bonds rose four basis points to 1.78%, while 30-year yields climbed roughly six basis points to 2.11%. Meanwhile, 30-year bond futures recorded their steepest decline since March. A recent central bank monetary policy report indicated that policymakers are in no hurry to aggressively ease policy.
Despite the current rally, the Shanghai Composite remains far from the heights seen in 2015, when a leverage-fueled buying spree pushed the index to 5,166 before the bubble burst. The all-time peak for the index was set in October 2007.
Investor sentiment has shifted dramatically in just a few months. Previously, fears of a prolonged and damaging trade conflict between the world’s two largest economies had rattled markets globally. The recent rally aligns with a broader rise in global equities, with U.S. and Indonesian stocks reaching new highs last week and helping push the MSCI global equity index to a record level.
The surge in China’s stock market has triggered heightened trading activity. On Monday, turnover on mainland exchanges exceeded 2.7 trillion yuan ($376 billion), marking the second-highest daily volume ever, according to Bloomberg data. This follows record mainland investor purchases of HK$35.9 billion ($4.6 billion) in Hong Kong stocks last Friday, as bullish sentiment spilled across borders.
There has also been an increase in margin lending, suggesting investors are leveraging to participate in the rally. Margin debt for stock purchases climbed to its highest level since 2015 and is now about 10% shy of an all-time high.
Other policy adjustments have further encouraged investment in local equities. China has tightened oversight on taxes for gains from overseas stock trading and announced subsidies for interest payments on eligible personal consumer loans.
In Hong Kong, the Hang Seng Index advanced 0.2% to 25,321.11, while the Hang Seng Tech Index jumped 1.3%. On the mainland, the tech-heavy STAR Market surged 3.1%, and the Shenzhen ChiNext Index gained 3.6%, with telecom and IT stocks leading the CSI 300 Index.
“Bond yields and deposit rates remain low, while the wealth effect from equities continues to attract funds,” said Amber Zhou, analyst at Haitong International. “We expect the rotation from deposits and bonds into stocks to continue.”
Market analysts attribute the rally to several factors, including continued government support for strategic sectors, record-low bond yields encouraging a rotation into equities, and expectations of further economic stimulus amid slowing growth. Foreign investor inflows into A-shares have also increased, aided by relaxed trading quotas and rising confidence in China’s long-term growth prospects.
Despite headwinds from domestic property market pressures and global geopolitical tensions, broad-based buying has sustained momentum. Sector-wise, technology, consumer discretionary, and industrials outperformed, while traditional energy and real estate stocks lagged.
Investors are also watching the upcoming Jackson Hole symposium in Wyoming, where Federal Reserve Chair Jerome Powell is scheduled to speak Friday. Markets are pricing in more than an 80% chance of a 25-basis-point U.S. rate cut next month following softer-than-expected July jobs data.
Despite a slowdown in July’s official growth data, regular state buying and hopes for additional stimulus have underpinned investor confidence in Chinese stocks.
In Hong Kong, shares of Zijin Mining fell 1.8% amid weaker gold prices, while property developer Longfor Group dropped 2.9% amid continued pressure on home prices. Tencent eased 0.3% to HK$590.50.
Earnings season is also underway, with Xiaomi, Baidu, and Hong Kong Exchanges and Clearing scheduled to report this week. So far, 31 of 85 Hang Seng Index companies have disclosed results, showing an average profit growth of 11% compared with 17% in the prior six months, according to Bloomberg.
Elsewhere in the Asia-Pacific region, Japan’s Nikkei 225 rose 0.7%, Australia’s S&P/ASX 200 added 0.2%, while South Korea’s Kospi fell 1.2%.
