China Stock Party may have Resumed

Chinese stocks were on fire on Monday after Beijing pulled out fresh stops to put a floor under slumping share prices over the weekend, however strategists continue to remain on edge about the outlook for the mainland market.

The Shanghai Composite rocketed 7.8 percent to 3,975 at the start of trade before paring gains over the course of the morning session. The benchmark index was last seen up 2.2 percent.

“In our base case, we believe these measures may stabilize market sentiment in the near term, but we believe the effects may not be sustainable,” JPMorgan wrote in a note. “Without de-leveraging the A-share markets and deepening capital market reforms in order to attract more funds (i.e., overseas money), a rebound could be short-lived,” it said.