China’s A-share market promises a bright future despite its extensive decline on Monday, an analysis by the China Securities Journal pointed out today.
China’s stock market experienced a full-scale downward adjustment on Monday. The Shanghai Composite Index closed at 3,523.00 points, down by 0.99%, the biggest single-day drop in a month and a half.
The SZSE Component Index registered an even weaker performance, dropping by as much as 1.77% to close at 11,352.72 points.
Kweichow Moutai Co., Ltd., a landmark on the A-share market, suffered the most significant single-day slump for its shares since 2015. Its stocks went down by 5.26%, with 51.37 billion RMB erased from its market capitalization.
Analysts attributed this full-scale slump to the eagerness of investors to pocket gains from the stock market just ahead of the Lunar New Year.
Against this backdrop, any weak performance by the blue-chip stock can be exaggerated to affect other stocks across the whole A-share market, as was the case on Monday.
Yesterday, the drop in stocks of Kweichow Moutai Co., Ltd. wreaked havoc on investors’ confidence. Following this drop, shares on the beverage and food block were also down by 4.05%, and those on the telecommunications and home appliances blocks also fell sharply.
Analysts pointed out that such downward adjustments were just temporary.
The recent declines on the A-share market did not change the fact that it is still on a zigzag rising path, thanks to a stable economic growth in China and an inflow of global capitals to undervalued domestic stocks, according to the CITIC Securities Company Limited.
In the long term, the A-share market is expected to operate on an upward trajectory as value investments continue to take hold.
Blue-chip stocks and leading players in the market will be the largest recipients of value investments. The scenario for the A-share market in the future will be one in which strong players remain strong and grow even more powerful.
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