(Bloomberg) -- China’s technology and property shares are on the brink of a technical correction, raising doubts over the sustainability of a recent rebound in the country’s equities.

The Hang Seng Tech Index rose 26% from an April low, while a Bloomberg Intelligence gauge of property stocks in China and Hong Kong rallied 74%. But they’ve retreated since, signaling that the advance may have been simply a tactical play on cheap valuations. Concerns over earnings, disappointment with the government’s stimulus and geopolitical tensions continue to weigh on sentiment.

“The pullback since May 20 represents the return of doubts that policy rhetoric will translate into reality,” Thomas Gatley, a China strategist at Gavekal Research, wrote in a note Wednesday. “Longer-term, the key for more sustainable gains is a shift away from perennially, hugely negative net liquidity dynamics — a shift which would likely involve a reassessment of China’s industrial policy.”

Intensifying price wars in China’s artificial intelligence services and a deepening trade war with the US are putting pressure on technology companies. Further property easing measures by major cities and China’s broad rescue package have also failed to assuage concerns over sales improvement.

Money managers, burnt by years of underperformance in local equities, have remained cautious. The tapering rally also reduces the odds of emerging markets’ outperformance, testing the faith of value investors who rotated into China’s cheap stocks from more expensive growth markets like India. 

Emerging-market investors’ underweight position in China may pave the way for more flows into the market when the economic outlook improves. The market may also be supported by efforts like record spending on share buybacks this year.

“It takes time to see whether the policies released can address the core problems in the economic slowdown,” which makes funds hesitant about continuously investing in the two sectors, said Shen Meng, a director at Beijing-based investment bank Chanson & Co. 

Read: Chinese Stocks Stage a Rally That’s Yet to Convince Global Funds

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