(Bloomberg) — Chinese stocks languished as onshore traders returned from the Lunar New Year holidays, with broader caution toward the market offsetting buoyant travel and spending data.
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The benchmark CSI 300 Index opened 0.8% higher on Monday, only to erase its advance within minutes of trading. The moves trail gains seen offshore when mainland China was shut Feb. 9-16. A gauge of stocks in Hong Kong had rallied nearly 5% in three sessions since it reopened on Wednesday while the Nasdaq Golden Dragon China Index jumped 4.3% last week.
Monday’s trading shows that doubts run deep over the China market’s longer-term prospects, as the broader economy struggles with deflation and a property crisis. Traders want to see further policy support across the monetary and fiscal space, in addition to a cut in the reserve requirement ratio already undertaken.
Onshore stocks had rallied ahead of the holidays as authorities sought to revive investor confidence, with state funds ratcheting up purchases, a slew of regulatory tweaks to reduce selling pressure and a surprise replacement of the securities regulator chief. The benchmark CSI 300 Index rebounded from a five-year low and climbed 5.8% in the week before the break.
Still, the CSI 300 gauge has lost more than 40% of its value since a 2021 peak, hammered by China’s stringent Covid controls, regulatory crackdowns, an uneven economic recovery as well as geopolitical tensions. Global funds have been opting out of Chinese stocks and seeking alternatives in other markets such as India and Japan.
The Hang Seng China Enterprises Index fell more than 1% Monday.
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