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Stocks in China and Hong Kong hit a positive bounce after the Chinese State Council pledged its support for the broad equity market.

Stocks across China and Hong Kong surged following affirmation by China’s State Council that it will keep its stock market stable. The chief administrative authority also vowed to support Chinese companies looking to conduct share listings overseas. This positive development in the East Asian region comes on the heels of the latest equity market rout, the worst since the 2008 slump. The Chinese markets lost $1.5 trillion across the last two sessions during the period.

Amid news of the China state council’s pledged support for the stock market, crypto remains stable with liquidity spread thin. Meanwhile, the Hang Seng China Enterprises Index spiked 12% on Wednesday, representing its biggest gain since the global financial crisis. In addition, a benchmark of Chinese tech firms listed in Hong Kong climbed by a record 20%. China’s benchmark CSI 300 Index also inched forward by 4%.

Weighing in on the development, Quant Technology Investment fund manager Wang Mingxuan said:

“Personally, I fear that the crisis the market faces is not just about China, it’s a global issue, and not just something that regulators can solve with this. The calm this brings is just the calm before the storm.”

Even some of the worst-hit stocks of tech giants like Alibaba Group Holding and Tencent Holdings gained no less than 20%. Furthermore, Chinese state media reports that there would soon be some normalization to regulating China’s tech sector. In addition, Beijing stated that it would take on some of the risks for property developers.

China Stocks Had Been Burdened with Investor Fears Stemming from Both Domestic & International Inductions

Chinese equities recently hit a freefall amid regulatory fears of increasingly strict measures by government authorities. In addition, there were growing investor fears of how Western superpowers would handle Beijing’s alleged close ties with Russia. Speculation was rife that the United States and its allies would also impose devastating sanctions on the East Asian country.

On another front, there is some dispute between Chinese financial regulators and their US counterparts. The bone of contention is allegedly the availability of Chinese company audits to US officials. This issue seems to be at a deadlock now, with the US even threatening to delist Chinese ADRs if these audits are not provided.

JH Investment Management fund manager Li Weiqing touched on all the recent developments stemming from the latest Chinese stock outlook. According to Weiqing:

“Usually, the market’s natural bottom comes after the policy bottom, which we are seeing now. This time around things may be different, as the rout was looking like a financial crisis. The macro figures are also pointing to a bottom. But even if this is not the end, we can at least expect more stability in the next week or so.”

However, some market observers still choose to err on the side of caution regarding the latest Chinese stock bounce. For instance, according to an earlier assertion by JPMorgan Chase & Co, some Chinese internet names still remain “uninvestable” in the short term.

Source: www.coinspeaker.com

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