Investor confidence in China's stocks touched a record high in December as the mainland's bluechip index jumped 26 percent in the month thanks to a slew of official financial reforms, local media reported on Monday. The monthly index compiled by the China Securities Investor Protection Funds (SIPF) rose to an all-time high at 71.2 points in December, the official Shanghai Securities News and other media reported.
That was up from 70.5 in November, according to the SIPF's November survey in its website, www.sipf.com.cn. Sentiment was also supported by monetary easing steps, the Shanghai Securities News quoted the survey as saying. The People's Bank of China (PBOC) surprised markets by cutting interest rates in November. China's bluechip CSI300 surged 52 percent in 2014 to be the best performer among the world's major stock indices despite a slowing economy. Analysts say the stock market's outlook will be influenced by the pace of market reforms.
"Investor confidence hit a record high amid strong reform expectations and the official liquidity easing stance, with share prices surging, driven by bluechips represented by brokerages and banks," the SIPF was quoted by the newspaper as saying. "In fact, the investor confidence index began to return to the optimistic territory (of 50 points) last June and had continuously operated at high levels since," it said. The survey also showed that 48.2 percent of investors participating in the poll in December planned to increase their stock holdings. This was below the 50.3 percent recorded in November.
Some analysts say Chinese share prices have risen too fast over the past few months and have questioned the sustainability of the rally in the face of slowing economic growth and weakening corporate earnings. In November, Beijing also launched the Shanghai-Hong Kong stock connect scheme, giving foreign and Chinese retail investors unprecedented access to the two exchanges. Regulators took another step toward diversifying financial markets last Friday, approving trials of same-day "T+0" trading and options trading on certain exchange-traded funds (ETFs).
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