Chinese stock gauges rally 20%, bolstering market bottom calls

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Also Read: Demand for Indian bonds skyrockets in recent months – 5 key reasons why The CSI 300 Index of mainland shares has gained about 13% since a five-year low reached Feb. 2. The Hang Seng Tech gauge advanced more than 4% on Tuesday, with Xiaomi Corp.

contributing the most to the gains after the automaker announced it will start selling its long-awaited electric vehicles this month. Beijing’s resolve to deliver 5% economic growth this year suggests incremental stimulus will continue to flow in, analysts said. Data show the economy is on the mend, with inflation back in positive territory for the first time since August and manufacturing and services no longer in deep slump.

“We expect high single digit or low-teen earnings growth overall this year," said Nicholas Yeo, head of China equities at abrdn plc. “We expect deflationary pressure to reduce this year which would provide companies with more pricing power. We are around the range of the bottoming." Xi’s slogan of “high-quality development" — which prioritizes sustainable growth from high-tech industries over the debt-driven expansion of the past — is luring early bets from investors, who argue state support will drive industries from electric vehicles to hydrogen power, chipmakers and automation.

Traders are also rewarding better-than-expected earnings more generously. Li Auto Inc. and Xinyi Solar Holdings Ltd.

each jumped the most in years after delivering better-than expected quarterly earnings, a reversal from last year when even positive results failed to boost stocks. “I think upping your allocation to China probably makes sense now," Lazard Asset Management’s Chief Market Strategist Ronald Temple said in a Bloomberg TV interview last week. “China could be