To the point – it is highly symbolic – to supplant their Japanese neighbors for the first time in three years in terms of capitalization, becoming the second world market, right after the United States.
In Shanghai, the stock index has gained 9.6% during the past month, which is its biggest increase since December 2012. Since the beginning of the year, the rise in the index is 24%, which puts China on track instead of an annual increase that promises the highest since 2009, according to Bloomberg.
Shanghai has particularly benefited from several IPOs, but also the opening of a “connection” with the Hong Kong Stock Exchange: investors present in the island were allowed to invest on the mainland site (and vice versa) – but with a daily quota of financial flows. This had the effect of “dope” the value of a certain number of shares in Shanghai.
In previous years the situation had been much worse for the Shanghai Stock Exchange: Shanghai Composite Index had recorded a fall of 35% between early 2010 and late 2013, Shanghai stood among the worst financial centers in the world.
The good performance of the Chinese mainland instead results in a market capitalization up 33% this year, to 4480 billion, according to data compiled by Bloomberg. At the same time, the market capitalization in Tokyo fell 3.2% since the end of December 2013, standing at 4,460 billion. China had already become, briefly, world financial center in March 2011, after the earthquake in Japan.
The Shanghai Composite index rose three times faster than the Tokyo Topix this year, reports Bloomberg. Japanese markets were penalized by the fall of the yen against other currencies. In China, investors expect new authorities’ efforts to support the economy, particularly through the revival of monetary stimulus. Beijing has cut interest rates last week for the first time since 2012, and analysts expect further support from the government.