With news of Chinese tech stocks rocketing over 30% splashed across virtually all headlines, it is human tendency to believe that the worst is over when the market has been shrouded in such intensive negativity over the last few weeks.
Most people would perceive such price spikes as signs or even start of a reversal, especially when the Chinese tech stocks are clearly oversold. However, it is imperative to ask ourselves - Have the key risks really been mitigated?
It is comforting to most investors that China has openly declared a much more cooperative stance compared to the past. However, whether the Chinese government can fully address US concerns are yet to be determined, not forgetting that China's stance towards the Russia-Ukraine conflict will likely have a bearing on the trend for Chinese stocks.
Besides the aforementioned political risks, China is facing another risk domestically - the aggravating Covid-19 situation. The recent lockdown, coupled with the anticipated economic growth, poses a risk to the performance of Chinese companies.
One can never accurately predict the bottom or a true reversal, and many studies have shown that staying invested instead of predicting the market will reap bigger benefits in the long run. Do Dollar Cost Averaging (DCA) at key support levels, and most importantly buy within your means.
May the market be in your favour! [Victory]
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