Chinese Stocks Expected to Surge by at Least 10% in Coming Days, Says Analyst
If you’re eager to make some gains in the stock market, then Chinese stocks may be a good bet. According to Marko Papic, partner and chief strategist at Clocktower Group, Chinese stocks are likely to climb by at least 10% in the coming days. It’s important to consider that Chinese authorities are signaling concerted support efforts for the market, which certainly bodes well for investors.
One key indicator of this support is the recent report from Bloomberg stating that Chinese President Xi Jinping was to receive a briefing from financial regulators about the latest stock market sell-off. This meeting was expected to happen as soon as Tuesday, signaling that authorities are indeed taking the market’s performance seriously.
Further signs of support come from the Chinese securities regulator, which has issued multiple public statements in recent days aimed at bolstering investor confidence. Among these announcements are indications of possible state-backed purchases, indicating that the government is committed to taking steps to stabilize the market.
Taking a look at recent market performance, mainland Chinese stocks traded mostly higher on Wednesday after hitting a five-year low earlier in the week. This uptick in performance, coupled with the signals of support from Chinese authorities, gives hope that the market may have seen a bottom in investor sentiment. As a result, a 10% to 15% rally in Chinese equities is likely in the coming trading days, making it an attractive prospect for investors.
It’s worth noting that last week, Clocktower advised investors to refrain from bottom fishing, indicating a shift in their view regarding Chinese stocks. However, it’s important to be cautious and not rule out the possibility that the current rally could be a temporary uptick followed by a continuation of the market’s downtrend.
One important consideration is the upcoming Lunar New Year holiday, during which mainland Chinese stock markets will be closed. It’s uncertain to what extent Chinese authorities will be able and willing to act to support the market during this time. Furthermore, previous interventions in the market in 2015 did not achieve their intended goals, which is something to keep in mind as investors weigh their options.
Looking ahead, it’s expected that China’s economic growth will continue to slide without last year’s supportive base effects. Policymakers are set to discuss growth targets and policy focus at the National People’s Congress in March, which will be a key event for investors to monitor.
Overall, the signs are promising for Chinese stocks, and with the support efforts from Chinese authorities, the market is positioned for a potential surge in the coming days. If you’re considering strategic plays in the market, Chinese equities may be worth keeping an eye on. With the right approach, investors may have an opportunity to capitalize on the market’s potential upswing. As always, it’s important to approach investing with caution and carefully weigh the risks and opportunities before making any decisions.
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