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(Bloomberg) — Chinese stocks saw modest gains as onshore traders returned from the Lunar New Year holidays, with broader caution toward the market offsetting buoyant travel and spending data.

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The benchmark CSI 300 Index climbed 0.5% as of 10:56 a.m. local time on Monday, belying expectations of a bullish open after the Feb. 9-16 break. A gauge of stocks in Hong Kong had rallied nearly 5% in three sessions since it reopened on Wednesday while the Nasdaq Golden Dragon China Index jumped 4.3% last week.

Monday morning trading shows that doubts run deep over the China market’s longer-term prospects as the economy struggles with deflation and a property crisis. Investors were expecting a rally onshore after state media reported that about 474 million domestic tourist trips were made during the eight-day holiday, up 19% from the same period in 2019 before the pandemic.

“Onshore markets may be reopening with some positive momentum after holiday spending data was better than expected, but given the strong rebound entering the holidays it will take more measures to be sustained,” said Marvin Chen, strategist at Bloomberg Intelligence.

Mainland stocks had rallied ahead of the holidays as authorities sought to revive investor confidence, with state funds ratcheting up purchases, a slew of regulatory tweaks to reduce selling pressure and a surprise replacement of the securities regulator chief. The benchmark CSI 300 Index rebounded from a five-year low and climbed 5.8% in the week before the break.

It a meeting of the State Council on Sunday, Premier Li Qiang called for “pragmatic and forceful” action to boost confidence in the economy, underscoring the government’s concern with a struggling recovery and stocks rout.

“It’s worth noting that this year’s Lunar New Year holiday spanned eight days, compared to the seven days in 2019,” said Redmond Wong, market strategist at Saxo Capital Markets. “Additionally, the average tourism spending per trip declined from the levels in 2019 as well.”

Foreign investors offloaded more than 3 billion yuan ($416 million) of mainland shares as of mid-morning. Global funds have been opting out of Chinese stocks and seeking alternatives in other markets such as India and Japan.

Traders want to see further policy support across the monetary and fiscal space, in addition to a cut in the reserve requirement ratio already undertaken. China refrained from lowering a key policy interest rate on Sunday as its central bank sought to shield the yuan from volatility. Some economists expect commercial lenders to reduce their loan prime rates on Tuesday.

Tech stocks on the CSI 300 Index stood out on Monday. Cambricon Technologies Corp. and Zhongji Innolight Co. jumped more than 8% as Chinese names related to artificial intelligence responded to OpenAI’s unveiling of its new system, called Sora, that can create realistic-looking videos. Healthcare shares fell the most.

In Hong Kong, the Hang Seng China Enterprises Index slid more than 1% to snap a three-day advance.

“There is some profit taking in Hong Kong market today such as with the Macau casino operators after strong data prints of the Chinese New Year holiday,” said Dickie Wong, executive director of research at Kingston Securities Ltd. The next thing to watch is a potential lowering of the five-year loan prime rate, Wong added.

The latest Bank of America Corp. survey of money managers showed that going short Chinese stocks, which has been the second-most crowded trade for months, is becoming more popular. A third of the respondents said they will increase their allocation if they see more aggressive fiscal policy to boost the real estate sector.

Any stimulus signs emerging ahead of the key annual meetings in March, where the leadership announces the economic growth target and development goals, will thus be closely watched.

“In terms of tourist consumption numbers, most of the beat comes from the traffic numbers and if you look at average spending, austerity still exists,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd.

–With assistance from Charlotte Yang.

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