SHARES listed in Shanghai and Shenzhen look poised for mild early gains on their return from a week-long holiday, supported by a surge in Hong Kong-listed names and easing concerns about regulatory headwinds for the nation’s battered tech sector.

A U.S.-listed exchange-traded fund tracking the benchmark CSI 300 Index gained 1.6 percent last week, the most in about two months, while Hong Kong’s Hang Seng China Enterprises Index jumped nearly 3 percent Friday in its first session post the Lunar New Year break.

The CSI 300 had fallen into a bear market amid a US$1.2 trillion rout just before the holiday, as worries about a weak economy and the property sector’s debt woes outweighed the government’s monetary easing.

Given their weakening correlation with offshore markets, stocks on the Chinese mainland may move to keep up with any initial upward momentum unless policymakers take more steps to restore investor confidence, including stronger fiscal spending and further credit loosening. How China’s central bank will manage liquidity after its pre-holiday pump priming will also offer clues.

“The correlations of A shares with offshore are waning, and as such offshore market conditions won’t determine their short-term direction,” said Hao Hong, chief strategist at Bocom International, referring to mainland stocks.

Mainland traders will return from their long break facing challenges ranging from weak local manufacturing and housing data to an expanding camp of hawkish foreign central banks.

The monetary policy divergence between China and the United States — touted as one key reason for global brokerages to turn bullish on Chinese equities — hasn’t yet led to any meaningful gains, with last month’s cut to a key interest rate failing to excite traders in China. (SD-Agencies)