China stocks on Tuesday snapped a six-session winning streak, as some investors booked profits on doubts over the sustainability of the market’s rebound that was driven by the country’s abrupt drop of its zero-COVID policy. ** China’s blue-chip CSI 300 Index slipped 0.1% by the end of the morning session, while the Shanghai Index lost 0.2%.
** Hong Kong’s Hang Seng Index dropped 0.3%, and the Hang Seng China Enterprises Index declined 0.5%. ** Other Asian shares fell following hawkish comments from two U.S. Federal Reserve officials overnight, with investors turning cautious ahead of key inflation data due this week.
** “It’s unlikely that fundamentals and policies will improve significantly as the Spring Festival will arrive soon,” Guosheng Securities said in a note, adding that it’s better to accumulate lower-valued companies rater than chasing high-flying stocks at current stage. ** The market is shifting from “expectation-driven” to “fundamental-driven”, they said. The CSI 300 had rebounded roughly 15% since November on bets over China’s reopening.
** China’s week-long Spring Festival holiday starts on Jan 21. ** Chinese fund managers had warned the next wave of market gains will be less broad-based, instead they will pay more attention to companies’ fundamentals going forward.
** In China, trading was mixed, with healthcare and semiconductors up at least 1%, while new energy vehicles and defence shares both dropped more than 1%. ** Tech giants listed in Hong Kong, meanwhile, edged down 0.7%.
** Morgan Stanley analysts said in a note, “We believe the market is under-appreciating the far-reaching ramifications of reopening and the possibility that a robust cyclical recovery can occur despite lingering structural headwinds.” ** “2023 will be a year for China equities to lead global market performance, in our view, with the momentum likely more concentrated in the 1H of the year.