Chinese stocks have gained a fresh breath of life on a slew of developments…some news, some rumors. But then, the market buys the rumors and dumps the news.
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While President Xi Jinping further tightening his grip on power had sent Chinese names into a free fall, investor sentiment in these names is recovering fast.
After months of a standoff over the audit of U.S. listed Chinese companies and an overhanging sword of delisting, U.S. audit officials have completed on-site inspection of these companies ahead of schedule and are set to return to the U.S. early, according to Bloomberg.
Further, a single screenshot (with unverified origins) has already led to a nearly half-a-trillion dollar rally in Chinese names and optimism abounds about the country moving past the stage of strict COVID-19 lockdowns which saw major cities being completely locked down for weeks on end.
The developments seem positive and after months of turmoil, these names look like they have nowhere to go but up. But then very few in the market can smell a bull trap from afar and short squeezes can die out quickly.
Additionally, a flight of capital from China remains a real possibility with global geopolitical developments moving on fast levers in the present scenario.
Nonetheless, major names including Alibaba (BABA), NIO (NIO), and XPeng (XPEV) are already up 10%, 10.6%, and 19.8% respectively, today.
The Direxion Daily FTSE China Bull 3x Shares ETF (YINN) too is up nearly 20% today already.
Related tickers:
- JD.Com (NASDAQ:JD)
- Baidu (NASDAQ:BIDU)
- Bilibili (BILI)
- Sohu (SOHU)
- Li Auto (NASDAQ:LI)
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