China’s Surging Small-Cap Stocks Stir Bubble Fears as Beijing Ramps Up Support

A man wearing a mask walk past the Shanghai Stock Exchange building at the Pudong financial district in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, on Feb. 3, 2020. Aly Song/Reuters

SHANGHAI/HONG KONG—A surge in small-cap Chinese stocks, fueled by government stimulus measures to support the virus-hit economy, is triggering fears of a repeat of the boom that preceded the 2015 market crash.

China has injected massive funds into the banking system, cut interest rates and encouraged lenders to extend cheap loans to limit the financial fallout from the coronavirus epidemic, which has hit businesses hard, from retailers to manufacturers.