Coming off its best week since November, the benchmark CSI 300 Index climbed another 2.1%, with turnover on Shanghai and Shenzhen exchanges reaching a combined 3.1 trillion yuan ($433 billion) – the second-highest on record. Technology shares continued to lead the charge, with stocks in the property sector also joining the broadening advance on evidence of more support measures.
Investors are betting that the rally has room to run further amid a capital rotation into equities, optimism over DeepSeek’s updated model, and expectations that authorities will keep sentiment supported before a military parade on September 3. But with some key benchmarks now up more than 20% from this year’s low, signs of overheating have also started to emerge.
“The stock rally reflects abundant liquidity rather than improved fundamentals,” Macquarie Group economists including Larry Hu wrote in a Friday note. Under such conditions, investors are more willing to give “thematic plays the benefit of doubt” and liquidity indicators are key to watch, they said.
The latest good news came from the property front. Shanghai eased home-buying rules to contain the prolonged property crisis, allowing eligible residents to buy an unlimited number of homes in the outer suburbs. That lifted shares of some developers like China Vanke Co. by as much as 10%.
Any improvement in the real estate sector may help broaden a rally that has so far been led by growth stocks. Expectations that Beijing’s self-sufficiency drive will aid local chipmakers have fuelled gains in recent sessions.