Chinese stocks bounce back

Shanghai stocks bounced back on Thursday morning, although some observers warned of the potential for a so-called 'dead cat' bounce.

The Shanghai Stock Exchange’s benchmark index was up by 5.7% as of 06:20 its largest rise since early 2009.

That followed several weeks of intense share price drops and reports of forced selling of financial assets as investors scrambled to raise liquidity to meet margin calls.

“China is in the midst of a triple bubble, with the third biggest credit bubble of all time, the largest investment bubble (proxied by the investment share of GDP) and the second biggest real estate bubble. This is occurring against a backdrop of near record producer price deflation, near record low growth in bank deposits (the main source of internal liquidity), FX outflows (the main majority of household wealth),” analysts at Credit Suisse said in a research note e-mailed to clients.

Nonetheless,”we doubt that the impact of the sell-off in Chinese equities is that,” they added.

Hong Kong's benchmark Hang Seng index bounced back alongside it, to close 3.73% higher at 24,392.79 points.