After geopolitical tensions wiped out $446 billion in mainland stock value this month, dip buyers halted the Chinese stock rout.
In the afternoon session, the benchmark CSI 300 Index traded 0.3% higher after falling as much as 0.7% earlier.
Chinese Stock Market Improves
After a six-day decline, the MSCI index of Chinese shares rose by more than 1 percent, but it is still on track for its worst April since 2004. The offshore yuan recovered from its lowest level against the dollar in nearly seven weeks.
It is expected that this week’s meeting of China’s Politburo, the country’s highest decision-making body, will focus on economic issues.
Economists anticipate that Beijing will shift its policy emphasis to bolster business confidence and increase employment without adding additional stimuli. A robust rebound in tourism during the Golden Week holiday may also contribute to an improvement in sentiment.
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US Planning Tech Curbs for Beijing
In recent days, sentiment deteriorated as a result of a report that the US is preparing additional measures to curb Beijing’s tech ambitions. In light of the rapid deterioration of China’s economic ties with the United States, many investors have begun to question the attractiveness of Chinese assets.
Jae S. Yoon, Chief Investment Officer at New York Life Investment Management, claims that US investors are still hesitant to make investments in China. It’s unclear how the US government could suddenly advise against investing in China within the next two years.
Some people view things more optimistically. Due to “extremely robust profit growth in China,” domestic equities may pick up steam, claims Goldman Sachs Group Inc.
Sunil Koul, a strategist at Goldman, estimates that, compared to the historical average of 60-70 percent, approximately 90 percent of companies have issued positive profit alerts thus far.
After being oversold on Wednesday, the market is showing short-term signs of stabilization, according to Yan Kaiwen, an analyst at China Fortune Securities Co.
From a longer-term perspective, the economy is expected to experience an even stronger rebound in the second quarter,” thereby increasing the desirability of assets denominated in yuan, Kaiwen added.
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