Shanghai, Shenzhen stock exchanges to run test to ensure smooth trading amid transaction surge

China's Shanghai and Shenzhen stock exchanges will reportedly conduct a series of tests on their platforms on Monday to ensure a smoother trading experience, as the combined turnover of the two bourses surged to 2.6 trillion yuan on the trading day before the seven-day National Day holidays, driven by various stimulus policies.

In order to ensure smooth transactions after the National Day holidays, the Shenzhen Stock Exchange will conduct system connectivity tests on Monday, when related securities firms can test their technological systems for trading after the holidays, according to a notice on the bourse's website.

Meanwhile, the Shanghai Stock Exchange will conduct a similar test on Monday, the CCTV news reported.

Following transaction delays during trading on September 27, the Shanghai Stock Exchange conducted a test on September 29 to ensure the platform's stability during peak order submission periods.

China's recent favorable policies including a cut in reserve requirement ratio and interest rates to support economic recovery have significantly boosted investor expectations. The recent stock rally has also increased the demands on trading systems.

On the last trading day before the week-long National Day holidays, the benchmark Shanghai Composite Index surged 8.06 percent to close at 3,336.50 points, while the Shenzhen Component Index jumped 10.67 percent to close at 10,529.76 points.

The Chinese stock markets are closed from October 1 to Monday.

Hong Kong's stock market continued to rise, with the Hang Seng Index increasing by 10.2 percent between September 30 and Friday.

Since the beginning of the fourth quarter, the overall market atmosphere has remarkably improved, Hong Kong's Financial Secretary Paul Chan Mo-po wrote in his blog on the official website of Hong Kong government on Sunday. The Hang Seng Index has risen to about two-and-a-half-year high, surging a total of 5,600 points over the past 15 trading days, or around 33 percent.

From the beginning of September to Friday, the daily turnover in the Hong Kong stock market reached about HK$192 billion ($24.72 billion), double the level recorded in August, according to official data, he wrote.

Due to a recent surge in securities account openings driven by market trends, the China Securities Depository and Clearing Corporation (CSDC) opened its account platform and identity verification system on Sunday, a day earlier than scheduled, to manage the high volume of account reviews, according to media reports.

"Given the strong stock market performance in Hong Kong, the upward momentum may continue and A-share will likely open higher on the first trading day after the National Day holidays," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, said to the Global Times.

Recently, the country's central bank, top securities regulator and financial regulator have announced a raft of monetary stimulus, property market support and capital market strengthening measures to foster the country's high-quality economic development. "The strength and timing of this round of policy rollouts exceed the expectations of both domestic and global investors," Yang said.

Wang Zonghao, head of China equity strategy research at UBS, said in a note sent to the media that he believes the short-term momentum of A-shares will likely continue until mid-October. "Historically speaking, Chinese stocks tend to perform better in October, showing a 1.5 percentage point increase compared to the monthly average," he said.

UBS announced an upward revision of the year-end target price for the MSCI China Index to $70, reflecting improvements in policy coordination, US rate cuts, and progress in corporate governance reforms.

A wave of capital that previously left Chinese equities for stocks in Japan and Southeast Asia is poised to reverse as investors rush to catch the rally, Bloomberg reported, citing market watchers.