Talk about a delayed reaction. After being closed Monday, the Shanghai Stock Exchange Composite Index gained 1.9% to 2993 and the Shenzhen Stock Exchange Composite Index leapt 2.9% to 1,929.
Market participants said the rally was sparked by comments from President Xi Jinping’s late Friday. As he chaired the Communist Party’s Politburo meeting of Chinese leaders he urged “healthy development of the stock market” as well as “strengthening market supervision and protecting investor interests,” according to a statement carried by official media.
The Chinese market was led by the consumer staples, health care and technology sectors. Shares of NanJing Pharmaceutical jumped 7.6%
Top Chinese leaders rarely show such public support of the stock market, so traders pay more attention to their comments when it occurs, analysts told Marketwatch. There are signs of a hopeful turnaround in Chinese economic performance and even top leaders like Xi want to drive the point home.
Chinese investors “continue to believe that China will continue to maintain the stock market to become more bullish,” Castor Pang, head of research at Core Pacific-Yamaichi International, a Hong Kong brokerage told Marketwatch.
The bullish liftoff in China came after a downer Monday when a 3% drop in the Nikkei sparked a stock downdraft across the continent.
On Tuesday, Japan’s stock market was closed and most Asian stock markets rallied after Australia cut its benchmark interest rate and Chinese stocks were energized by Xi’s words.