Shanghai composite hits decade high

China's benchmark Shanghai Composite Index briefly topped the 4,000-point mark on Tuesday morning — for the first time in a decade — reflecting growing investor confidence in the economic prospects of the country as it readies to advance innovation-driven, high-quality development over the next five years.

Analysts said China's stock market is set to emerge as a preferred and important destination for global investors amid rising market resiliency, with the latest refinements to the qualified foreign institutional investor mechanism further facilitating the entry of long-term overseas capital.

On Tuesday morning, the Shanghai Composite Index hit 4,010.73 points, the highest since July 2015, led by stocks related to Fujian province, before retreating on profit-taking pressures to close at 3,988.22 points.

Yang Delong, chief economist at First Seafront Fund, said the surge that saw the index surpassing the 4,000-point mark 10 years ago was primarily driven by infrastructure and real estate stocks. In contrast, the latest market uptrend was mainly led by high-tech industries, reflecting a shift in market structure and the progress of China's economic transformation.

The Shanghai Composite Index has risen 19 percent so far this year, while the STAR 50 Index and the ChiNext Index, two gauges tracking China's tech-oriented and innovative enterprises, have surged over 48 percent and 50 percent, respectively.

The recommendations for formulating the 15th Five-Year Plan (2026-30) for national economic and social development, adopted at the fourth plenary session of the 20th Communist Party of China Central Committee, set achieving significant progress in high-quality development and substantially enhancing the capacity for scientific and technological self-reliance as main targets for the coming five years.

Alex Zhang, a portfolio manager at global asset management company Fidelity International, said that the session, charting the path of China's economic development over the next five years, has strengthened investor confidence in the country's focus on developing new quality productive forces that are "independent and controllable".

"We reiterate our optimism about four major investment tracks — artificial intelligence, aerospace, the low-altitude economy and innovative consumption," Zhang said. "We are full of confidence in China's innovation-driven transformation and high-quality development during the 15th Five-Year Plan period."

Another key factor supporting investor confidence has been China's continued capital market reform and opening-up. At the Annual Conference of Financial Street Forum 2025 on Monday in Beijing, Wu Qing, chairman of the China Securities Regulatory Commission, vowed to introduce a series of measures to deepen capital market reform on both the investment and financing fronts, underscoring China's commitment to fostering the steady and healthy development of its capital market.

In another development, the commission unveiled on Monday the most comprehensive upgrade to the qualified foreign institutional investor program since 2020, which allows approved overseas institutions to invest in China's domestic securities markets, marking a concrete step in advancing institutional opening-up.

According to a two-year working plan, key measures include allowing qualified foreign investors to use exchange-traded fund options for risk management, expanding their access to commodity futures and options trading, integrating qualification approval with account opening under a single streamlined procedure, and unifying short-term trading rules to ensure equal treatment for foreign and domestic institutions.