Sept 10, 2025

Basics

When Chinese Stocks Were Recently the Cheapest in 10 Years

When Chinese Stocks Were Recently the Cheapest in 10 Years

The Chinese stock market in 2021-2024

Against the backdrop of the COVID-19 pandemic, Chinese stocks fell to a historic low in the first part of this period, and stayed that way for several years.

The main driver of this plummet was that the government’s crackdown on tech in late 2020 tore the rug out from under the sector to the tune of over $1 trillion.

The Chinese stock market in 2021-2024
China's GDP from 2013 to 2023

To add insult to injury, the government also instituted a strict zero-coupon policy, which meant the only way to profit was to buy low in an overbought market and wait for the price to stabilize. As a result, even with the lockdown being lifted in 2023 and businesses returning to operating, it took until mid-2025 to finally get the stock market rolling again.

In 2024, the Chinese Securities Regulatory Commission, headed by its new chief Wu Qing, started scrutinizing market practices more closely, due in no small part to the increasing tensions with the United States.

During this period, the Shanghai Composite and other major indices fell sharply, and major companies such as Great Wall Motor and Poly Real Estate experienced dramatic share price declines. For example, by January 2024, Great Wall Motor's shares had fallen 27.86%, and Poly Real Estate's shares had fallen 43.81%.

The government potentially invested as much as 2 trillion yuan from off-shore accounts belonging to state-owned enterprises (SOEs) into the market, but this only served to somewhat slow the pace of drowning - still quite far from a full bailout.

The Chinese stock market in 2021-2024
Three Chinese indices: SSE, CSI 300, Hang Seng

A tough week for Chinese stocks

In one particular week in late Q1 of 2024, the Chinese government proposed an actual bailout of $319 billion - this time both from SOEs and “national team” companies like China Securities Finance Corp and Central Huijin Investment. As usual, this sparked a maelstrom of analyst criticism and speculation about the proper use and intelligent allocation of these funds. The Hang Seng Index and CSI 300 recovered only slightly on these announcements. The ongoing real estate problems in the country and the slow pace of recovery from COVID lockdowns still kept investor sentiment, and thus the stock market, in the doldrums.

The Chinese stock market’s historic rally in 2025

Since early 2025, the market in China has finally sped up its recovery, to the point where, in August, it has reached its highest point in 10 years. With retail investors still sitting on the money they’ve saved up over the past five years, and the value of stocks growing on the back of growing private investor sentiment since early this year, the stock market and the economy stand to undergo a long-term bull run. Maybe, despite the short-term pain, taking the long view was the right decision.

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