Concern is mounting over the speed of a nearly $900 billion rebound in Chinese equities that’s been driven by bets of sustained government support.

The CSI 300 index of stocks in Shanghai and Shenzhen has climbed 10% since a record sell-off earlier this month, wiping out the slide following the end of the extended Lunar New Year break due to the coronavirus outbreak. The ChiNext gauge of smaller companies, typically the most speculative part of the market, has popped 21% from its bottom to be the best performer in Asia Pacific this year.

But the central bank’s move to withdraw another 220 billion yuan ($31.5 billion) from the banking system on Tuesday citing ample liquidity, after pulling out a net 700 billion yuan the day before, may show the risks of chasing further gains. The CSI 300 index closed down 0.5% Tuesday while the ChiNext climbed 1.2%, again notching its highest finish since December 2016.

“Shares are acting like we’re in times of exuberance, not the middle of a huge public health crisis,” said Shi Junbo, a fund manager at Hangzhou Xiyan Asset Management Co. in Beijing. “But as a rule, when shares rise solely on liquidity hopes, they will without exception tumble. We’re not getting away from the impact of the virus on markets once and for all.”

The ChiNext recouped post-holiday losses just two days after the A share market reopened to the virus scare on Feb. 3 with a record $720 billion plunge, followed by the CSI 300’s jump on Monday to surpass its close before the break. While the ChiNext is up 21% this year, the CSI 300 is down 1%. Many overseas markets are up so far in 2020 despite the spreading of the virus globally, with the S&P 500 Index rising 4.6%.

However keen Beijing is to mitigate economic pain, officials are also facing constraints on aggressive monetary easing as they struggle with a mountain of debt built up in the aftermath of the 2008 global financial crisis. The government’s 4 trillion yuan stimulus back then helped give rise to a ballooned shadow banking industry that threatened to destabilize the financial system, a heavily indebted state sector that local authorities bear contingent liabilities for and increasingly leveraged households as home prices surged.

In downplaying deleveraging efforts of the past few years, China’s government has cut taxes, lowered interest rates and allowed local governments to accelerate borrowing.

“You can’t expect China to keep rolling out supportive policies,” said Dai Ming, a Shanghai-based fund manager with Hengsheng Asset Management Co. “The regulators will likely monitor the effects of those on boosting the economy, before their next policy moves.” He plans to continue selling into the rally.

The rapidly rising valuations since the post-holiday slump have driven some investors to wonder how long the bullishness may last. Some are getting ready to take profit and exit once the outbreak shows signs of steady easing. The government’s historical caution against inflating asset bubbles, the still-unknown economic impact of shutdowns due to coronavirus-caused movement curbs and uncertainty over how the epidemic may evolve are weighing on their sentiment.

To be sure, some traders are less worried, arguing that the health crisis has created an unprecedented situation and that the government will go all out to put a floor under the economic slowdown.

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