stock market Photo:VCG

China's stock markets staged a miraculous turnaround on Thursday, with the Shanghai Composite Stock Index regaining the psychologically important 2,800-point mark and closing at 2,845.78.

Analysts said that the market is expected to stabilize and return to normal operations along with the country's sustained economic recovery, and they called for stepped-up policy support to bolster the economy and investors' confidence.

In the morning session on Thursday, the Shanghai Composite Index broke through the 2,800-point mark and fell to the lowest since May 2020. However, the index closed up by 0.43 percent at 2,845.78, while the Shenzhen Component Index rose by 1.0 percent to 8,847. The tech-heavy ChiNext index went up by 1.93 percent to 1,732.36.

Shares related to photovoltaic systems and artificial intelligence posted strong rebounds. 

Foxconn Industrial Internet Co rose by 8.12 percent to 13.71 yuan ($1.92) per share, solar energy giant LONGi Green Energy Technology Co up 7.04 percent to 22.8 yuan, and China Tourism Group Duty Free Corp up 6.33 percent to 84 yuan.

Despite the robust performance on Thursday, the A-share market extended the declining trend that began in 2023. The recent falls in both the A-share and Hong Kong stock markets reflected the pessimistic sentiment among investors. 

"Once market expectations improve, the domestic capital markets will gradually rebound," Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Thursday.

China's stock market may display a path from decline-to-rise in 2024, Yang said.

Intensified macro-policies are needed to drive up investment, consumption and the property sector to enhance investors' confidence, he said, noting that institutional investors are expected to enter the A-share market to explore opportunities.

"Along with the continuous upswing in the country's economic recovery, bearish news will gradually disappear. As a result, the stock market is expected to stabilize and return to normal operations," Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Thursday.

Yang said that China's monetary policy, featuring low interest rates and sufficient liquidity, is conducive to the stabilization and rebound of the stock market. 

In 2024, the US Federal Reserve is expected to cut interest rates three times, which will benefit the rebound of yuan-denominated assets.

Following the Central Financial Work Conference in October, a key meeting held on Tuesday reiterated plans to build China into a country with great financial strength. Financial oversight needs to have "teeth and thorns" and a sharp point, the meeting stressed, pointing out that law enforcement should be strict in terms of market access, prudential oversight and behavioral regulation.

Dong said that financial regulators need to strengthen communication with investors to avoid misinterpretation of regulations. In addition, authorities should strictly crack down on illegal behaviors in the field in accordance with laws.