SHANGHAI: China stocks rebounded on Monday as excitement around the launch of the country's first stock options offset worries over the economy following worse-than-expected trade data.
Financial shares, which represent some of the most heavily weighted stocks on the Shanghai Stock Exchange, climbed after the bourse launched options that offer investors a new hedging tool for trading index heavyweights.
"The options will increase trading in blue chips," said Zhou Lin, analyst at Huatai Securities.
"Although initially, the volume is not big, this would be enough to fuel a technical rebound after the recent sell-off, which I think was overdone."
China's first options are based on the exchange-trade fund (ETF) that tracks the SSE50 index, composed of the 50 most heavily weighted stocks on the bourse, reflecting regulators' desire to guide money into blue chips.
The CSI300 index rose 0.7 percent to 3,334.32 points at the end of the morning session, while the Shanghai Composite Index gained 0.3 percent to 3,085.09 points.
However, many analysts believe that the rebound in blue chips could be short-lived given that the market has already entered a consolidative phase that could last for several months following the strong rally over the past few months.
Trade data published on Sunday pointed to deepening weakness in the Chinese economy, with January exports falling 3.3 percent from year-ago levels while imports tumbled 19.9 percent, the sharpest since May 2009.
"The trade data is ugly, which points to a weaker economy ahead," said Wang Mingli, strategist at Guoyuan Securities in Shanghai.
"Even if there are fresh stimulus measures, they're aimed at aiding the economy, not the market."
The market is also worried about a flurry of initial public offerings this week, which some analysts forecast could freeze more than 2 trillion yuan ($320.1 billion) worth of capital.
Twenty-four companies, including Dongxing Securities, plan to raise an expected 15.2 billion yuan. Brokerage BOC International estimates that on Wednesday alone, 1.93 trillion yuan of subscription capital would be locked up.
That would add additional pressure to a market already struggling with tight liquidity ahead of next week's Lunar New Year holiday.
In Hong Kong, the Hang Seng index dropped 0.5 percent to 24,565.92 points. The Hong Kong China Enterprises Index lost 0.4 percent to 11,649.68.
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