Bulls charge in as bears quiver on top bourses

Investment appetite returns as key market gauge crosses major threshold

Bullish days seem to be round the corner in the mainland stock markets after a key market gauge crossed the 3000 mark on Monday, reaffirming the strong investment appetite.

The benchmark Shanghai Composite Index rose by 1.12 percent to close at 3027.58 points after hovering below the 3000 point mark for nine months in a row. The spurt also saw the gauge gain over 20 percent since the beginning of this year.

Other mainland indexes also rose on Monday. The Shenzhen Component Index rose by 2.36 percent to 9384.42 points, while the Nasdaqlike ChiNext in Shenzhen surged 3.31 percent to 1619.71 points. The total trading volume at the Shanghai and Shenzhen bourses exceeded 1.05 trillion yuan ($156.7 billion). At least 137 stocks saw their share prices surge by the daily limit of 10 percent.

Agricultural companies led the gains, with price rises of 5.39 percent. Property, computers, mechanical equipment and home appliance sectors saw intraday gains of over 2 percent on Monday, according to Shanghai-based market tracker Wind Info.

Yang Delong, chief economist at Shenzhen-based First Seafront Fund, said that the 3000 point mark works as the baseline for China's A-share market. A reading above 3000 indicates upward performance and with the gauge having surpassed the threshold, it is time for investors to lock in on the right targets.

Securities firms, as well as companies related to consumption and technology will show robust growth in the following months, said Yang. The A-share market will remain in bull territory for most of the next decade, albeit at a slow pace, he said.

Experts from Jufeng Investment Information said finance and technology will be the two main pillars for the market rebound. With the Shanghai Stock Exchange unveiling detailed rules and regulations for the science and technology innovation board during the weekend, investors' confidence will be further consolidated. As a result, companies specializing in information technology, artificial intelligence, and big data will lead the future market increase, they said.

Overseas investors' sustained interest in the A-share market has also buoyed the market performance. Global index compiler MSCI Inc said on Friday that it was increasing the weighting of A shares. Monday's revival was also aided by news that 253 new Chinese stocks would be included in the MSCI indexes. All the 27 ChiNext listed companies that are set to be included in the MSCI this year reported increases on Monday, with half of them up by 5 percent.

Pan Yongchang, a senior analyst with Nuode Asset Management, said that the inflow of foreign capital will speed up this year, with substantial increments.

Analysts from Essence Securities said in a note that the A-share market is approaching the tipping point at which it transitions from a bear market to a bull market. Although the price earnings ratio has been up from that registered at the end of last year, most of the industries are still undervalued. Therefore, there is still room for further pickup of A shares in the long term.