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Macro · Markets · Equity · Fund
First attacked by COVID-19 recovered miraculously fast, China’s stock markets outperformed most indexes showing immunity and resilience
2020/03/09 10:22:31

Mar 09, 2020 (China Knowledge) - If you think China is the biggest casualty from being the earliest victim to the COVID-19 epidemic you are very wrong about it. Economically speaking, the world's most populated country that imposed the largest scale of quarantine, if not the longest, in the history of human mankind must have incurred unthinkable losses. More than three quarters of its population were imposed with compulsory homestay quarantine which also shuns millions of factories and productive business activities across the nation. Such a feat to contain the epidemic and to protect human rights that are every single life won accolades of praises from the World Health Organization (WTO). So, it is not difficult to quantify the economic loss and financial damages that the epidemic has caused, and the atomic damage it could bring to its financial markets.

On the contrary, against all odds, and miraculously China’s financial is still kept intact, and running ‘quite-okay-for-now’ has surprised investors worldwide. Last Friday the Shanghai SE Composite Index closed at 3,035, up 5.4% in a week. In the same week, the Shenzhen Composite Index rose 5.5%, and its ChiNext Price Index was up 5.86%.

The A-shares trading last week was still very much active with daily turnover continued to maintain at RMB 1 trln level. Even in the aftermath of the nationwide quarantine of over 6 weeks, Shanghai’s stock market index (SSE Composite Index) broke through 3,000 points again which was the record highs in 2019. The foreign buying though has weakened somewhat in February, but foreign monies come back when the SSE Composite Index goes down to 2,900 points. Therefore, foreign capital has set a fair value to enter China’s equity market.

When global equity indices are compared on a 30-days performance since the outbreak of the epidemic in early Feb, and stretches to today’s indices China’s 3 main indices outperformed and hold down the rest – which includes the U.S., Japan, Germany, U.K, and France.

Align with Dow Jones and S&P 500’s futures’ 5% fall today the Shanghai and Shenzhen stock markets close 3% down. Seemingly, the equity markets that recovered from the epidemic’s damage will emerge sooner than the vaccine is put up on the market – possibly be, the Chinese antidote by means of very costly containment mode.   

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