All eyes on China’s unstoppable stocks after US$460 billion rally

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CHINA's equity market is firmly in the spotlight after an almost unprecedented rally that helped lift global stocks to a one-month high.

The speed of the past week’s gains in China is in many ways unseen since the stock bubble that burst five years ago. Monday’s surge alone added more than $460 billion to Chinese stock values, behind just one day in July 2015 as the biggest increase in shareholder wealth since the global financial crisis.

China’s state media struck a more measured tone on Tuesday, after earlier publishing commentaries that highlighted the case for buying shares. Two newspapers urged investors to be rational: the Securities Times -- one of China’s most widely circulated financial publications -- said investors should be mindful of potential risks and not use the market as way to make a fortune overnight.

"Regulators wouldn’t want to see rapid gains in the market either. But there remain plenty of opportunities, and investors will continue to rotate into some laggards so the uptrend is still intact.” As China’s tight capital controls limit the investment options for the country’s savers, this year’s low interest rates and the first losses ever for some popular wealth-management products are driving retail investors to stocks. But some analysts, as well as mainland media, say the country’s economic recovery and the government’s handling of the coronavirus outbreak have helped underpin the rally.

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