Business / Markets

Booming stock market a yes vote for China economy

(Xinhua) Updated: 2015-04-09 09:26

The bull run is now tempting many to climb back aboard. From March. 23 to March 27, 1.67 million new accounts were opened in the Shanghai and Shenzhen A shares markets, a record high number.

It is no easy job to attract so many new funds back. It is strong confidence in the Chinese economy, which is witnessing deepening reforms and restructuring, that has lured them back.

Instead of being directly linked to China's economic growth speed, the bull market is rather a result of multiple factors including funds, confidence and policies, Ni Zhengdong, founder of Beijing-based venture fund Zero2IPO Group, told Xinhua.

Since the new leadership took power in 2013, reforms of state-owned enterprises and the financial sector have been been accelerated, and programs including the Belt and Road Initiative and regional integration plans have also boosted morale in the market.

Popular entrepreneurship and innovation, adopted as the new engine for the "new normal" economy, and "Internet Plus" action plan unveiled by Premier Li Keqiang during the parliamentary sessions in March have also boosted investors' confidence in the economy which is undergoing transformation and restructuring, Ni said.

All these factors intertwined together have brought "enormous positive energy" to the stock market, he said.

From the beginning of the year until Wednesday, the Shanghai and Shenzhen shares have surged 23.5 percent and 25.7 percent respectively, while the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, soared 69.1 percent.

Analysts warned that risks still remain as a sustainable and healthy bull market must be built on a strong real economy.

Moving away from the double-digit growth of the most recent decade, China's economy has been facing notable downward pressure and has entered a stage known as the new normal, characterized by slow, but higher quality growth.

The economy posted 7.4 percent growth in 2014, its weakest since 1990. The annual growth target was lowered to around 7 percent for 2015.

Only when the great expectations for the real economy, which are embodied in the current bullish market, are reached, can the bull market get a solid foundation, Ni said.

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