Commentary: It’s Too Soon to Say Whether China’s Stimulus Rally Is Over

By Gao Ruidong

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The sustainability of the recent stock surge will depend on whether new policies boost economic fundamentals.

Chinese mainland stocks experienced a significant pullback Wednesday after share prices soared amid the optimism sparked by the central government’s new economic stimulus package. Was it just a typical correction following a surge, or does it signal an end to the current rally?

In my opinion, it’s premature to declare a peak until more detailed policies are released and the rationale for the rally is disproven.

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Chinese mainland stocks experienced a pullback after an initial price surge due to a new economic stimulus package.
The decline was likely due to profit-taking by investors, with valuations not at historically high levels and limited downside potential.
The future of the Chinese stock market depends on economic fundamentals and the impact of new policies on domestic demand.

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