Chinese stock market rebounds Friday

The Chinese stock market rebounded Friday as the market recovered from previous overreactions, analysts said.

The benchmark Shanghai Composite Index closed 3.10 percent higher at 2939.21 points, while the smaller Shenzhen Component Index leaped 4.03 percent to close at 9235.39 points.

The ChiNext Index, China's Nasdaq-style board of growth enterprises, jumped 4.38 percent to 1533.87 points.

The US tariff increase to 25 percent on $200 billion worth of Chinese goods took effect on Friday, which triggered an intraday loss of 1.88 percent of the Shanghai Composite Index when the market reopened after lunch.

But the index quickly rebounded, as the market had been factoring in the tariff hike from Monday and recovered from previous overreactions, said Liu Chunsheng, an associate professor from the Beijing-based Central University of Finance and Economics.

Chinese stocks slumped Monday amid the tariff hike threat from the US, with the Shanghai Composite Index shedding 5.58 percent to close at 2906.46 points. The index dropped further from Tuesday to Thursday.

"After digesting the potential tariff hike over the week, investors have become more rational. After all, the tariff hike wouldn't change fundamentals of listed companies in the short term," Liu said.

Liu cautioned however that if the trade tension is prolonged, it may weigh on the A-share market in the long term.

Analysts from Beijing-based China Jianyin Investment Ltd were more optimistic.

Considering the improving liquidity conditions and the historically low valuation level, the A-share market is apparently worth allocating to this year, said a report released by the company Wednesday.

In the short term, the A-share market may continue to rebound as the market has priced in short-term shocks and experienced a rather significant loss recently, analysts said.