SUPPORTIVE policies out of the government have helped add US$940 billion to the value of China’s equities since January, lifting firms in the finance, consumer, pharma, solar and education sectors.

Expectations that top officials will discuss additional measures at next month’s annual gathering, including plans to expand tax breaks, are contributing to the optimism.

It’s a significant shift from last year, when the government’s efforts to balance the country’s economy sent shock waves across a market already grappling with a trade war, record defaults and the weakest economic expansion in decades. The Shanghai Composite Index’s 25 percent drop was the steepest among the world’s major equity benchmarks, and its worst performance since the global financial crisis.

“China’s taken a U-turn across the board, making up for the decisions that dealt such heavy blows to its industries last year,” said Li Shiyu, managing director at Guangdong Xiaoyu Investment Management Co. “The nation’s leaders have realized that policy fine-tuning was needed amid an economic slowdown.”

Financial firms started surging after word got out that top officials had met with banks. The new securities regulator then began reversing many of the trading curbs that were put in place after the stock bubble burst in 2015, generating a buzz for brokerages. The prospect of looser rules for new listings, a pick-up in turnover and margin trading have done the rest. China Galaxy Securities Co., Haitong Securities Co. and Orient Securities Co. of China have all gained more than 30 percent this year.

The government has started to encourage listed firms to invest in vocational colleges, a sector currently dominated by the State. Winners include China Xinhua Education Group Ltd. and Hope Education Group Co., which have both soared almost 50 percent this year.

Health-care stocks tumbled last year on concern the government was driving down drug prices via a new centralized procurement program.

Details released last month offered some relief, with analysts saying the government may be more lenient than expected as it will allow a multi-year adjustment period for the price cuts. China also plans to cut a value-added tax on 21 drugs for rare diseases from March 1.

A drug-stock index has surged 17 percent this year after losing 27 percent in 2018. (SD-Agencies)