(Bloomberg) -- A rally in Chinese shares lost momentum as markets headed for the Lunar New Year holidays, a sign of lingering skepticism among investors as authorities show a stronger resolve to stem the equity market’s rout.

The CSI 300 Index rose 0.6% on Thursday after Beijing announced that Wu Qing, a banking and regulation veteran, will replace Yi Huiman as chairman of the China Securities Regulatory Commission. The onshore benchmark surged 4.5% in the previous two sessions, with its gain on Tuesday being the biggest in more than a year.

Stock trading on the mainland will be shut until the end of next week while the Hong Kong bourse will conduct half-day trading on Friday. An index tracking Hong Kong-listed Chinese firms was down 1.2% in late trading.

The abrupt appointment of Wu, who earned the reputation as “the broker butcher” when he led a crackdown on traders in the mid-2000s, cemented the impression that authorities are increasingly concerned about the economic and social damage of a struggling stock market. The move added to a drumbeat of rescue measures, from wider trading curbs to a show of support by the nation’s sovereign wealth fund, that triggered a rebound earlier this week.

Read more: Everything China Is Doing to Rescue Its Battered Stock Market

Data on Thursday showed that China’s consumer prices fell last month at the fastest pace since the global financial crisis, indicating stubborn deflationary pressures for the world’s second-largest economy. That may add to calls for authorities to do more to stimulate the economy and reverse a stock market slide that wiped out more than $7 trillion from the value of equity markets in China and Hong Kong.

“Sentiment has only modestly improved given all the news that has come out but I suspect that this was more about short covering and not necessarily a change in views of the equity market,” said Ken Wong, an Asia equity portfolio specialist at Eastspring Investments Hong Kong Ltd. “We will need to see more policy announcements to help improve sentiment.”

Overall though, Chinese stocks ended the week with strong gains. The CSI 300 jumped 5.8% to cap its best performance since November 2022. Smaller stocks — which have led the selloff in the new year — rallied harder. The CSI 1000 Index jumped 4.1% on Friday, capping the week with a surge of more than 9%.

Foreign investors jumped on the bandwagon too, buying 16.1 billion yuan ($2.2 billion) of mainland stocks via Hong Kong trading links on a net basis this week.

Read more: China Short-Selling Curb Sparks $195 Million Squeeze in ETFs

Meanwhile the removal of Yi, who had been in charge of the CSRC since 2019, echoed a move to shift the market chief in 2016 after an earlier epic selloff in stocks. The dismissal of the 59-year-old was a surprise as officials of his rank typically retire at 65.

China’s previous decisions to name new markets chiefs have proved a success in boosting shares. The CSI 300 rose more than 40% in almost a two-year span after Liu Shiyu was assigned to replace Xiao Gang in February 2016. The gauge rose more than 80% over two years after Liu was replaced by Yi five years ago.

Pressure is mounting on Beijing to act more quickly and resolutely to end the market meltdown, which poses a growing threat to financial and social stability. The rescue measures rolled out so far have mostly been piecemeal in nature, including wider trading restrictions on investors including quantitative hedge funds, as well as moves such as guiding brokerages to adjust margin call levels. Earlier efforts included curbs on short-selling as well as state buying of shares in the nation’s largest banks.

The Lunar New Year holidays, running from Feb. 9-17 this year, will have investors scouring spending data like travel and box-office receipts for signs about the health of the economy. Expectations are soft this year, with analysts saying consumers are likely to tighten their belt given the bleak economic outlook. Also, prior-year comparisons may set a high bar, as 12 months ago the economy was rebounding strongly from Covid shutdowns.

“We expect the market to remain volatile,” said Homin Lee, senior macro strategist at Lombard Odier. “For China to reverse the sentiment, it’s going to take a lot of work.

--With assistance from John Cheng, Charlotte Yang and Ishika Mookerjee.

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