Can the Chinese rally continue ?

China shares rally to hit four-month high

Thanks to commitment from Beijing to enact serious reforms on its financial market in 2015, Mainland Chinese shares rallied to their highest in four months.

Earlier on Monday, China said that guidelines had been approved which would see a range of reform policies implemented. This includes measures to increase the yuan’s role internationally. As a result, the Shanghai Composite index led Asian gains at the close, registering a rise of 3.2% to 4,417.55. Hong Kong’s benchmark Hang Seng index finished 0.4% higher at 27,693.54.

The guidelines on reforms for the economy include an experimental investment link between the Shenzhen and Hong Kong stock exchanges. It is expected to follow one already established between Shanghai and Hong Kong, according to the Financial Times. That said, there no official statement has yet been made about when the new investment link will come into play.

China’s approved guidelines for economic reform also pointed to changes in taxation, deposit rates and state-owned enterprises.

Tian Weidong, an analyst at Kaiyuan Securities said Beijing’s “policy backdrop” would see investors “emboldened to stay in the market”.

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