SHANGHAI: China stocks edged lower on Wednesday, as excitement fades about Shanghai coming out of lockdown amid lingering concerns over the economy.

China’s bluechip CSI300 Index dipped 0.2%, while the Shanghai Composite Index fell 0.1%. The indices had rebounded over the past weeks.

Shanghai, China’s financial hub, sprung back to life on Wednesday after two months of bitter isolation under a ruthless COVID-19 lockdown.

It comes after China’s cabinet announced a package of 33 measures covering fiscal, financial, investment and industrial policies on Tuesday to revive its pandemic-ravaged economy.

However, analysts expect the Chinese economy to contract in the second quarter, and the recovery to be a grinding process heavily dependent on COVID developments, with consumers and businesses unlikely to regain confidence immediately.

Much has been made of the ending of Shanghai restrictions today, with many seeming to think it offers an instant panacea to an Asian slowdown. Unfortunately, I must add a word of caution here,” wrote Jeffrey Halley, senior market analyst, Asia Pacific OANDA.

“China’s zero-COVID strategy has not suddenly gone away... any returning outbreaks in Beijing or Shanghai or Shenzhen etc, will put China back to square one.”

Song Xiangqian, chairman of private equity firm Harvest Capital, expects a full recovery to pre-pandemic levels to take years.

In China, banks, consumer staples and resources shares dropped, while start-up board ChiNext and real estate shares rose.

S&P Global Ratings estimates the broad measure of nonperforming assets could worsen to 6.5% for Chinese banks in 2022, as China’s COVID wave could add 1.1 trillion yuan in forborne bank loans.

However, Kristina Hooper, chief global market strategist at Invesco, said there could be an opportunity in Chinese stocks, whose valuations are very attractive. “In addition, I anticipate continued monetary policy accommodation and strong fiscal stimulus.”