CBN丨Momentum builds in China’s A-share market

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Here’s what you need to know about China in the past 24 hours

The signs of a bull run are slowly but steadily emerging in China's A-share market, underpinned by ongoing structural reforms and sustained long-term capital inflows.

The Shanghai Composite Index rose for an eighth straight session on Wednesday, climbing to close at 3,683, its highest since December 2021. On Thursday, the benchmark index opened higher, hitting 3,700 points in early tradings, before heading down to close 0.46 percent lower.

Nevertheless, investor enthusiasm is surging on both the institutional and retail fronts. The combined trading value at the Shanghai and Shenzhen bourses topped CNY2.15 trillion and CNY 2.28 trillion in the latest two sessions.

July also witnessed a record monthly number of new mutual fund launches, reflecting rising interest among households in equity assets as returns from traditional savings and wealth management products continue to decline. Total assets under management in public mutual funds have now exceeded CNY34 trillion.

Insurance companies are also ramping up their presence in the A-share market. The number of public disclosures triggered by insurers' equity holdings surpassing the 5 percent threshold has already exceeded last year's total. Analysts said insurers are increasingly focusing on companies from the emerging industries and advanced manufacturing sectors, supporting China's shift toward high-quality development.

Retail investor participation is also rising. Nearly 14.6 million individual trading accounts were opened in the first seven months of 2025, a 37 percent year-on-year increase, according to data provider Wind Info.

Furthermore, foreign investors have been steadily increasing their exposure to Chinese equities, including A-shares and Hong Kong-listed stocks. Net foreign inflows totaled US$2.7 billion in July, more than double the level in June, according to a recent report by Morgan Stanley.

Analysts said the macro environment is becoming increasingly favorable for Chinese equities. Expectations of a weaker US dollar and potential interest rate cuts by the Federal Reserve are improving the outlook for emerging markets. The narrowing interest rate differential between China and the United States could further accelerate foreign capital inflows.

Hong Hao, chief investment officer at Lotus Asset Management, said the upward momentum of Chinese stocks will sustain for a long time if the US dollar's weakness proves to be a multiyear trend. Also, the Chinese market has been increasingly resilient in the face of negative tariff headlines.

Given the current favorable liquidity conditions in the Chinese market and the fear-of-missing-out sentiment, any corrections in the A-share market are likely to be quickly absorbed by buyers, he added.

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