Months of good and bad news cycles

Local stocks picked up strength to finish yesterday's trading session with a gain of over 570 points in the Hang Seng Index.

Although the volume of turnover was not particularly impressive compared to the best days, it nevertheless added a positive note to a financial market that has lost more than 30 percent of its value during the Covid pandemic.

Investors remained mostly cautious yesterday until the final 30 minutes of the trading session, during which the index rose steeply.

Clearly, caution is still the key word.

In the markets, there is a common saying, "One may sell in May and go away."

That failed to apply this year as the ominous month came early during the pandemic, with Shanghai coming under devastating lockdowns and the SAR fighting its worst wave of outbreaks.

Having said that, the question is: could July - also taken as the month for markets to turn around - already be here early?

There are headwinds ahead, including dampened economic growth in the mainland and aggressive interest rate hikes in the US.

At the same time, there are also policy tailwinds to be expected from Beijing to prevent the economy crash landing.

This may best be summed up by Premier Li Keqiang's emergency meeting on the economy with 100,000 party cadres at different levels from across the country.

It is likely that more positive notes will follow Li's high profile following his crisis talks on the economy.

Former People's Bank of China advisor David Li Daokui revealed at a private bank video-link conference that Beijing's forceful crackdown on tech and platform companies is over.

Incredibly, he said tech firms such as Alibaba's fintech affiliate Ant Group and, subsequently, other platform businesses were dealt the blow due to the political influence that these companies had gathered and that it had little to do with the common prosperity policy.

In other words, the crackdown was due to political, rather than economic, concerns.

Having stripped these giants of their political clout, Beijing's decision-makers now enjoy peace of mind, clearing the way to stepping back from the crackdown.

Whether true or not, it can be anticipated that such messages positive to the economy will be well received by the Hong Kong and mainland markets that have been agitated by so much bad news over the period.

As I commented here before, the premier's national crisis meeting on the economy could signal the easing of lockdowns in Shanghai and other major cities.

In Shanghai and Beijing, authorities were reported to be on course to easing some local Covid restrictions.

It is too early to say that the markets here and in the mainland have bottomed out to usher in a new turnaround moment.

Instead, it could be a pattern of alternation between positive policy talks and periodic economic data releases.

The overall background is still the stark warning made by the premier at the 100,000-plus meeting.

As they plan their strategy, investors may also have to closely monitor the cycle of good and bad news.