An investor watches a board showing stock information at a brokerage office in Beijing, China.
Jason Lee | AP
BEIJING — Chinese stocks will likely climb by at least 10% in coming days as authorities signal concerted support efforts, said Marko Papic, partner and chief strategist at Clocktower Group.
Papic pointed in particular to Bloomberg’s report Tuesday that Chinese President Xi Jinping was to receive a briefing from financial regulators about the latest stock market sell-off. The report, citing sources, said the meeting could have happened as soon as Tuesday.
The Chinese securities regulator has issued multiple public statements in recent days aimed at bolstering investor confidence, including announcements of state-backed purchases.
“If you’re willing to meet, to help with stocks, then why wouldn’t [you] do something to help stabilize growth?” Papic said.
He added that it would be “very strange if the Chinese focused on stabilizing equities, not the fundamental macro economy.”
Beijing has so far refrained from large-scale stimulus. However, tensions with the U.S., a weaker-than-expected recovery from the pandemic and a slump in the real estate market have sent consumer sentiment to near record lows.
The National Financial Regulatory Administration and the China Securities Regulatory Commission did not immediately respond to CNBC requests for comment.
Mainland Chinese stocks traded mostly higher Wednesday, following gains on Tuesday. The Shanghai composite had hit a five-year low on Monday.
“We may have seen a bottom in investor sentiment,” Papic said in a phone interview Wednesday.
A “10% to 15% rally in Chinese equities is likely in coming trading days,” he said. “Tactical plays to bottom fish this may make sense.”
That’s a shift in Clocktower’s view from just last week when it told investors to “refrain from bottom fishing.”
Papic said he’s been bearish on Chinese stocks for the past 12 months, and didn’t rule out the possibility the latest rally “could be a dead…
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