The Shanghai Stock Exchange hit a two-year high very recently as new coronavirus cases fall inside the country and rise elsewhere around the world. Chinese stocks have been on a 13% run over the last month, more than recouping the huge one-day fall when trading resumed after the long Lunar New Year break when the novel coronavirus broke out.
Shares in several big Chinese financial firms are driving the gains. The country's largest insurer, Ping An Insurance is up nearly 6% since Monday, as are China Merchants and Industrial Bank, all of which trade in Shanghai.
An ongoing Chinese stock market rally and a yuan exchange rate rebound over the last week have fanned speculation that, as the coronavirus appears to be coming under control, China could become a new safe-haven for investors with other major economies now the ones reeling from the outbreak.
Well before the U.S. Federal Reserve's surprise March 3 rate cut, the People's Bank of China was reducing key lending rates. President Xi Jinping's government has been cutting taxes, increasing business loans and prodding municipalities to boost borrowing to finance public works projects.
Outstanding Chinese bonds held by foreigners also rose to 1.95 trillion yuan ($280 billion) in February, from 1.89 trillion in January, and 1.88 trillion yuan in December.
At every turn, China confounded the naysayers thanks to aggressive stimulus. In 2008, credit in the banking system was about $9 trillion; by late 2019, it had swelled to $40 trillion. Between Beijing's fiscal rescue team, the central bank and local governments anxious to maintain rapid growth, China has proved an astounding ability to protect its markets.
China's economy is not less vulnerable to a potential pandemic than other countries', but its relatively closed system and sizable firepower make it easier to fight what is causing major stock markets to fall around the globe.