Familiar signs of euphoria emerged before Beijing moved to cool the rally on Friday. Turnover soared, margin debt grew at the fastest pace since 2015 and a bullish state media helped spur sentiment.
"There are many similarities between now and 2014, including ample liquidity conditions and a weak economy, ” said Ming."But Beijing needs a bull market to help support corporate funding needs at a time when the economy is struggling.”The 2014 rally began to accelerate that October, with China’s market value increasing 32% by the end of the year. The pace is even faster this time around with a increase of 41% since a March trough.
Daily turnover exceeded 1.5 trillion yuan on July 6, the first such reading since 2015, and stayed around that level the rest of the week. A similar spike in turnover was also seen in late 2014.