Weak confidence and fears of policy tightening among local investors could undermine bullish bets by their offshore peers, who have ploughed US$28 billion of fresh funds into yuan-denominated stocks this year.
Corporate earnings season will put to the test the resilience of a run-up on Chinese stocks, as first-quarter net income for the companies on the CSI 300 Index probably dropped 13 per cent year on year.
Chinese stocks entered bull-market territory after a week-long Lunar holiday before surrendering some of the gains at closing. Prices in Hong Kong weakened amid concerns about its sharp rally this year.
China’s onshore stocks take a breather after a five-week winning streak to near a four-month high as market overheats. Markets in Hong Kong are closed for a holiday.
The turnaround in Chinese stocks, which were the world’s worst performers not so long ago amid lockdowns, underscores the resilience of the world’s second-largest equity market to the global rout.