China stocks pulled back from bull market territory on Monday, the first trading session after a week-long Lunar New Year break.
The CSI 300 index initially surged but lost steam in afternoon trading to end up about half a percent higher, failing to maintain bull market territory. Today’s pop then selling pressure is a suspicious start to the Year of the Rabbit and might indicate profit-taking.
Some analysts believe Chinese stocks might take a much-needed breather after nearly three months of gains. The CSI 300, which tracks the largest Chinese mainland-listed stocks, gained 19.88% from its October 2022 low.
“It seems like a classic move for onshore — open high then go lower. I think the market is very excited about the Chinese New Year data, but in reality, if you look at the details, it is kind of mixed,” said Willer Chen, senior analyst at Forsyth Barr Asia Ltd.
Despite the bullish views on the reopening narrative that has helped propel Chinese stocks in recent months, there are a bunch of lingering negatives, including the Biden administration’s tech war against Beijing, Covid infections, broad slowdown, and a housing crunch.
In the US, Chinese stocks retreated in premarket trading. KraneShares CSI China Internet ETF slid about 4% in premarket trading.
And the Golden Dragon China Index has erased all of ist Lunar New Year gains now…
The latest BofA survey showed that long Chinese stocks made the list of the most overcrowded trades this month, which might indicate that investors are taking profits after months of gains.
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