China's Stock Market Surge: Reaching New Heights Amid Trade Truce

China's stock market has surged to its highest point since 2015, driven by improved trade relations with the U.S. and liquidity shifts. The Shanghai Composite Index rose 1.2%, and the market capitalization of Chinese companies exceeded 100 trillion yuan. Optimism in tech and AI sectors contributed to this growth.

In a remarkable surge, China's stock market soared to its highest level since 2015, buoyed by waning trade tensions with the United States and a liquidity-fueled rotation from bonds into equities. This market rally pushed the total capitalization of China-listed companies above the 100 trillion yuan mark for the first time.

The Shanghai Composite Index saw a 1.2% increase, while the CSI 300 Index climbed 1.5%, fueled by enthusiasm for tech stocks and global excitement surrounding advances in artificial intelligence. Analysts credit these gains to a shift in sentiment driven by the recent trade truce and Beijing's favorable policy signals, despite underlying economic weaknesses.

According to a note from Bank of America's chief China equity analyst, Winnie Wu, optimism over geopolitical developments and government policy helped lower the equity risk premium. Further bolstered by rising interest in the tech and electric vehicle sectors, this upward momentum is expected to continue in the near term, with investors seeing limited downside risk.

(With inputs from agencies.)