The Chinese stock market rebounded on August 20 after a decline the previous day. However, the increase was modest, making it difficult to interpret as a signal of a trend reversal. The Shanghai Composite Index closed up 0.24% at 3,903.72, the Shenzhen Component Index rose 0.59% to 13,972.78, and the ChiNext Index gained 0.64% to finish at 3,495.59.
The U.S. Treasury's announcement to double the size of its long-term Treasury buyback program to $4 billion positively impacted the Chinese market. Following this announcement, the yield on 30-year U.S. Treasury bonds fell to around 5.19%, while the 10-year yield dropped to 4.64%. This eased concerns over the recent surge in long-term interest rates that had pressured global financial markets.
Analysts also noted a technical rebound following the previous day's sharp declines, with bargain hunting in stocks that had fallen excessively.
In a report, Dongfang Securities stated, "Technology stocks remain a key pillar supporting the market in the medium term, but the portfolio allocation should gradually shift from AI hardware to other AI sectors." They added, "In the medium term, uncertainty is at a stable level, and risks are manageable."
Construction stocks saw a rare uptick, with Chengdu Holdings hitting its upper limit and Xinda Dichan recording significant gains. This was bolstered by the Shanghai municipal government's announcement of new real estate market stabilization policies. The measures include optimizing public fund policies and expanding the scope of down payment assistance to support home purchases.
The pharmaceutical and biotech sectors also performed well, with Shiyao Chuangxin and Boteng Guifen reaching their upper limits. The surge in shares of Chinese biotech companies was influenced by Moderna's stock, which soared 180% in the U.S. market after announcing positive results in Phase 3 clinical trials for an mRNA cancer vaccine developed in collaboration with Merck. This outcome was seen as validation of the potential of mRNA technology, stimulating interest in Chinese mRNA firms.
On the same day, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7808 yuan, a decrease of 0.0046 yuan from the previous day, reflecting a 0.07% increase in the yuan's value.
* This article has been translated by AI.
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