SHANGHAI: China stocks on Tuesday snapped a six-session winning streak, as some investors booked profits on doubts over the sustainability of the market’s recent rebound.

China’s blue-chip CSI 300 Index closed up 0.1%, while the Shanghai Index lost 0.2% after rising in previous six sessions.

Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index declined 0.3% each.

The CSI 300 has rebounded roughly 15% since November on bets around economic reopening in China. In a policy U-turn, the country dropped its zero-COVID policy in early December.

Other Asian shares fell following hawkish comments from two US Federal Reserve officials overnight, with investors turning cautious ahead of key inflation data due this week.

“It’s unlikely that fundamentals and policies will improve significantly as the Spring Festival will arrive soon,” Guosheng Securities said in a note, adding that it’s better to accumulate lower-valued companies rater than chasing high-flying stocks at current stage.

The market is shifting from “expectation-driven” to “fundamental-driven”, they said.

China’s week-long Spring Festival holiday starts on Jan 21.

Chinese fund managers had warned the next wave of market gains will be less broad-based, instead they will pay more attention to companies’ fundamentals going forward.

In China, trading was mixed, with semiconductors and automobiles up 1.1% and 2.9%, respectively, while banks lost 1.2 percent.

Tech giants listed in Hong Kong, meanwhile, edged down 0.3 percent.

Morgan Stanley analysts said in a note, “We believe the market is under-appreciating the far-reaching ramifications of reopening and the possibility that a robust cyclical recovery can occur despite lingering structural headwinds.” ** “2023 will be a year for China equities to lead global market performance, in our view, with the momentum likely more concentrated in the 1H of the year.”