The eased restrictions on travel and quarantine, combined with reduced tracking ability due to the testing halt, left investors outside of China confused about how to monitor the world's second largest economy heading toward the Chinese Lunar New Year in January.

After three years, China decided to roll back its zero Covid policy last week. The Chinese government had been gradually paring back restrictions. The Hang Seng Index in November saw its best month in more than two decades, continuing to soar during the first week of December.

Analysts are not expecting a quick turnaround for China's post zero-Covid economy. Many analysts stress caution, warning that it may take months to see how China's economy and markets respond to eased restrictions, Reuters reported Wednesday.

China's decision to end mass Covid testing has also thrown investors into disarray. It is now difficult to now get a read on the spread of infections, and on the likelihood Covid that restrictions could return, according to Reuters.

Official Covid cases in China dropped over the past week. However, the Wall Street Journal reports caseloads appear to be growing in urban centers.

China Stocks Take A Dive As Analysts Preach Caution With China

Some analysts have forecast there could be large Covid outbreaks around the Lunar New Year holiday in late January, Reuters reported.

ING Group economist Iris Pang wrote Thursday that China's retail sales shrank last month, and December could be weak as well.

China's retail sales fell 5.9% year-on-year in November, down from a 0.5% year-on-year drop in October. Pang wrote the overall situation could be worse in December with Covid cases "climbing." This could potentially mean more sickness in the labor force in the early part of 2023.

"In short, the economy is slowly picking up but it is difficult to be optimistic about growth in the fourth quarter of 2022 and first quarter of next year," Pang said.

U.S. crude oil prices dropped around 1% to $76.53 per barrel Thursday. Oil futures had gained around 9% over the past three sessions as it appeared demand in China was set to get a boost. China is the world's top crude importer.

Louis Navellier, Chief Investment Officer of Navellier & Associates, commented Thursday that China's refiners have already started purchasing more crude oil from Brazil, West Africa and the Middle East in anticipation of rising demand.

"Russia has traditionally been a big energy supplier to China, so I expect that Russia's energy exports of crude oil and natural gas will also increase," Navellier said Thursday.

@TigerStars 

It looks to be uncertain and remains to be seen if this bullish uptrend can be kept given the bearish sentiments in the market.

DYODD