Chinese equities look to hold on to hope for now at least

Some headlines from China since the weekend:

The first point has a familiar tone, with China pledging more stimulus but lacking any detail in the announcement. Beijing has been guilty of this for nearly two years. However, after the flurry of announcements leading up to Golden Week, investors are still holding out hope for now.

The CSI 300 rose another 1.5% today but did not erase last week’s decline, as today’s gains did not erase Friday’s decline either.

There were questions three weeks ago about whether this would be a turning point for Chinese stocks.

The surge leading up to the Golden Week holiday was certainly a big deal. But as we mentioned then, the real test is what comes next.

One can understand Beijing’s intentions to boost sentiment ahead of the country’s biggest holiday, getting people excited and satisfied with the government’s promises. But there must be some follow-up, not just “pumping and dumping” to hide the underlying economic situation.

Saturday’s preaching of patience amid a lack of detail is not quite what was hoped.

However, Chinese investors appear to be holding out hope with stocks rising at their open this week. But is it a matter of time before they turn their backs on Beijing again, as has happened every other time over the past two years?

Even with the jump at the end of September, China still represents a very interesting opportunity for investors looking for long-term value. But the question is how and when Beijing will finally steer the ship away from the rough seas.

The downward trend since 2021 has made valuations rather attractive. The only issue now is to look for this shift in sentiment. More specifically, one that can actually be sustained in a more significant way.