A nearly 5 per cent rise for Hong Kong’s Hang Seng China Enterprises Index over the past week has stoked expectations for a catch-up rally when mainland stock exchanges return from their 10-day Lunar New Year holiday on Monday.
Traders and strategists say recent gains by Chinese equities have rekindled some clients’ interest in the market after years of underperformance, although some pointed out that activity on the city’s exchange had been thin during the past few days, and that foreign institutional investors had mostly remained on the sidelines.
“I’ve got some decent buying, but at the same time I’m selling into it,” said the Hong Kong-based trading head at one investment bank. “Monday will be much more of an acid test for the direction of the China market.”