A $1.3 trillion rebound in Chinese onshore stocks from April’s sell-off is fuelling belief that the market is past its worst slump this year. The next struggle will be overcoming a technical market barrier and pessimism over corporate earnings and the economic outlook, reports the South China Morning Post.
Investors should consider selling into the latest recovery as earnings and valuations come back into focus, Manulife Teda Fund Management said. Local shares could also drift sideways on sluggish economic data, according to HSBC Jintrust Fund Management and China International Fund Management.
The euphoria following the end of citywide lockdown in Shanghai has helped yuan-denominated stocks outpacee returns in markets elsewhere. The Shanghai Composite Index has climbed 14% from the lowest point in April, while the ChiNext gauge of smaller companies in Shenzhen surged 19%. Benchmarks in the US and Asia-Pacific fell by 0.1 to 6.6% over the same period.