The sizzling rally in Chinese equities is continuing

The sizzling rally in Chinese equities is continuing

Most Asian equities are trading lower today but mainland Chinese stocks are bucking that trend as they continue to post gains as investors are still seemingly bullish about trade sentiment since last Friday. Of note, the Shanghai Composite has come close to reaching the 3,000 level for the first time since June last year before gains are seen fizzing off slightly now.

That said, the index is still trading up by a neat 0.7% on the day when other Asian bourses and US equity futures are trading lower.

While trade optimism may be a good starting point for investors to feel bullish again, it needs to be backed up by domestic economic data. And we'll get a taste of that over the next few days in what could potentially be a speed bump or a road block for equity gains.

On Thursday, we'll have Chinese manufacturing and non-manufacturing PMI survey releases for February before we get the similar Caixin readings to come on Friday and next Tuesday. Trade optimism can only fuel the rally so much, hence it is up to more positive economic data to bring it home for bullish investors and for risk sentiment in general.