China Stocks Rally Leaves Traders Puzzled

Chinese stocks experienced a sudden rally, with the Hang Seng Index climbing nearly 2% and the CSI 300 Index finishing up 0.8%. Traders are unsure of the cause, with some speculating about state-backed fund buying and others citing a report on China considering stronger action to address risks from local government financing vehicles. Foreign investors continued to sell onshore Chinese stocks, extending a record selling streak to 12 days. The recent losses in Chinese stocks have made traders nervous, as investor sentiment has deteriorated due to poor economic data, deflation fears, and a property market slump.