'Pain trade': UBS CIO warns of bear trap as Chinese stocks rise

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Adrian Zuercher, a chief investment officer at UBS, also said there could be a 'tactical trade' in the coming weeks.

The recent rally in Chinese stocks could catch investors out, according to a UBS chief investment officer, who warned of a "pain trade." Although China's economy has slumped in recent months , positive news flow in recent days helped push equities higher. The Chinese government cut stamp duty on stock trading , for example, and U.S. Secretary of Commerce Gina Raimondo arrived in the country on Monday for talks with senior officials .

If it's regulatory laws, if it's stimulus, if it's discussions with the U.S. on the trade war side, and all these aspects are actually adding to positive markets." He added that, if the positive news continues, Chinese markets could climb further. "The more news we [get] in this direction, the more markets can actually go back to levels we've seen at the beginning of the year," Zuercher said.

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