“For a turnaround in sentiment, we need to see something sincere from policymakers, either a lot of extra liquidity, a major shift in the Shanghai situation, or a massive surprise that will breathe some new hope into the market,” said Wang Yugang, a fund manager at Beijing Axe Asset Management Co. “Even in a critical year like this, a robust stock market has quite a low priority because currently there’s no systemic risk.
“The PBOC is looking to provide further support for the economy, and seems intent on pulling as many levers as possible, perhaps with the exception of lowering interest rates for now,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. “Allowing the yuan to weaken slightly this week seems to be part of the overall ‘support package.’”
With no end to tight Covid-19 restrictions in sight, overseas investors pulled a net 5.6 billion yuan from mainland shares this month after offloading 45 billion yuan in March, the largest outflow in nearly two years. Global funds slashed their holdings of Chinese bonds by the most on record in March.