On Tuesday, Chinese stocks rallied after declining virus cases boosted sentiment among traders in the nation's battered equity market.
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The benchmark CSI 300 Index jumped as much as 1.9% in early trading, adding to its 1.1% gain in the previous session. In Hong Kong, stocks also climbed. There were 51% decreases in new infections for Tuesday, to 1,487 cases, according to Shanghai. There were no cases that were found outside of quarantine. Cases also fell in Beijing.
There are factors that are working together at this stage, including a drop in Covid cases in Shanghai and increased expectations of policy impetus to boost growth in the second half, said Du Kejun, partner at Beijing Gelei Asset Management Center Limited Partnership. Longer-term funds could be buying the dip, while short-term money could be getting more active to trade a technical bounce. The nascent rebound is spurring hopes that the worst may be over for Chinese equities after a month long selloff caused by Covid lockdowns, regulatory crackdowns and rising global interest rates. Since mid-March, policy measures and promises of market stability from authorities have so far brought only small gains.
China's onshore market has solid foundation for stable operation, according to a report on Tuesday by the China Securities Regulatory Commission. President Joe Biden's comment that he and his advisers are weighing whether to reduce US tariffs on foreign imports to fight inflation is also adding to the buoyant sentiment.
The latest remark from CSRC, coupled with Covid situation in Shanghai, seems to be more in control, and the report of potential tariff relaxation from the US may have boosted today s sentiment, said Kevin Li, fund manager at GF Asset Management Hong Kong Ltd.
The onshore currency fell by 0.1% against the dollar, ending a four day losing run after the central bank set a stronger than expected yuan fixing rate. The offshore currency was steady.
China equities seem to be nearing the late stage of the bear market, but the final leg will be bumpy, according to Morgan Stanley strategists, sticking to their equal-weight rating for now.
The uncertainty surrounding China's Covid situation, global macro slowdown and monetary tightening will cause near-term volatility to remain elevated, according to strategists including Laura Wang. The CSI 300 is one of the worst performing national equity benchmarks, down almost 20%, according to a report by the International Monetary Fund.
The losses have been so excessive this year, and more people are ready to bottom fish, said Huang Yuhang, fund manager at Lanqern Capital Mangement Co.
Hong Kong's benchmark Hang Seng Index climbed by as much as 1.4% before trading up 0.9% as of 10: 44 a.m. local time. None Major League Soccer Threatens to Replace the NHL as One of the Big Four US Sports Sports
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