An investor looks at a board showing stock information at a securities company's office in Beijing, China.
Jason Lee | AP
BEIJING – Marko Papic, partner and chief strategist at Clocktower Group, said Chinese stocks are likely to rise by at least 10% in the coming days as authorities signal coordinated support measures.
Papik specifically pointed to Bloomberg's Tuesday report that Chinese President Xi Jinping is expected to receive an explanation from financial regulators about the recent stock market decline. The report, citing sources, said the talks could be held as early as Tuesday.
China's securities regulator has issued several public statements in recent days aimed at boosting investor confidence, including announcing state-backed purchases.
“If you can meet and help me with the stocks, why don’t we meet?” [you] Is there anything we can do to stabilize growth? ” Papic said.
He added: “It would be very strange if China were focused on stabilizing equities rather than fundamental macroeconomics.”
The Chinese government has so far refrained from large-scale stimulus packages. But tensions with the United States, a weaker-than-expected recovery from the pandemic and a weak real estate market have pushed consumer sentiment to near record lows.
The State Financial Supervisory Administration and the China Securities Regulatory Commission did not immediately respond to CNBC's requests for comment.
Mainland Chinese stocks were mostly higher on Wednesday, following Tuesday's gains. The Shanghai Composite Stock Price hit a five-year low on Monday.
“We may be seeing the bottom of investor sentiment,” Papik said in a phone interview Wednesday.
“Chinese stocks are likely to rise 10-15% during the next trading day,” he said. “For tactical plays against bottom fish, this might make sense.”
This is a change in perspective from just last week, when Clocktower called on investors to “refrain from bottom fishing.”
Papic said he had been bearish on Chinese stocks over the past 12 months and did not rule out the possibility that this rally “could be a dead cat rally.” This term refers to a small, short-term recovery that continues in a downward trend.
“But I don't think the fact that the Chinese government is willing to support stock prices and support the economy through fiscal policy is an ideological leap,” he said. “I think they're moving in the right direction.”
Clocktower says it is an alternative asset management platform. It also helps bring foreign capital into China.
Chinese stocks are still falling this year, following a year of significant losses in 2023.
Papik said a factor in this year's market decline was a mid-January meeting between Xi and other senior Chinese officials in which Beijing indicated it would focus its anti-corruption efforts on the financial sector. .
Stock markets in mainland China will close on Friday for the week-long Lunar New Year and are scheduled to reopen on Monday, February 18th. The Hong Kong Stock Exchange will be closed on February 12th and 13th due to public holidays.
The extent to which Chinese authorities are able and willing to act remains unclear.
“Similar interventions in 2015 failed to meet their targets,” Jeremy Stephens, Asia economist at Standard Bank, said in a note on Wednesday.
That summer, mainland Chinese stocks experienced a significant decline, but have yet to recover.
“We remember that in August 2015, Chinese stocks suffered their steepest four-day decline since 1996 amid concerns that the government would be forced to withdraw its market support strategy,” Stevens said. It's worth it.''
Regarding the future, he said, “China's economic growth is expected to continue slowing down in the future without the supportive effects of last year, and the market is expected to continue to slow down when policymakers decide on growth targets and policy focus at the National People's Congress in March. “We will closely monitor whether it is set.”
