BEIJING: China’s stock market climbed to levels last seen before the global financial crisis in 2008, extending its world-beating rally as investors bet monetary stimulus will revive an economy beset by four years of slowing growth.
The Shanghai Composite Index advanced 0.9 percent to 3,480.16 at 10:14 a.m., the highest intraday level since June 2008, as industrial and consumer-staples companies jumped. The gauge has risen 72 percent during the past 12 months, recovering from a retreat since August 2009 that had wiped out more value than any other equity market worldwide.
The turnaround, fueled by record margin debt and increased access for international investors, reflects growing confidence that President Xi Jinping will succeed in using lower borrowing costs to smooth the nation’s transition from an export-led manufacturer into a consumer-spending powerhouse. While the Shanghai market’s stimulus-driven rally of 2009 ended badly for investors, Morgan Stanley says this bull run has further to go as earnings growth accelerates.
“We still see significant upside,” Jonathan Garner, the Hong Kong-based head of Asia and emerging-markets strategy at Morgan Stanley, said in a phone interview on March 16. “The Chinese economy is successfully transitioning to consumer and services driven growth.”
The Shanghai Composite may rise to as high as 5,100 this year, Garner said. He has overweight recommendations on “New Economy” stocks in the technology, health care and consumer industries.
