Analysts at Danske Bank point out that equity markets have traded lower again in Asia, ending the strong rally in Chinese stocks yesterday.
“The rebound on Monday was probably partly due to Chinese state-backed funds buying, which is rarely enough to turn the market around. While we do see value in the Chinese market, we should expect continued high volatility as long as the US-China trade war is unresolved. However, more Chinese policy easing (tax cuts etc.) and reform announcements and a fairly strong housing market should support Chinese stocks as it reduces the risk of a hard landing.”