(Bloomberg) -- Chinese stocks are ending July on an optimistic note as Beijing showcases its determination to shore up an economy that’s lost steam in recent weeks.

Equities climbed again on Monday, adding to last week’s rally and helping key gauges cap their best month since January. China’s top economic planning agency released a wide-ranging policy document containing some recently announced consumption-related initiatives, and a separate report said big cities such as Beijing and Shenzhen may ease restrictions on the property sector.

That’s raising bets regulators are keen to follow through on the promises made at last week’s Politburo meeting. Having been disappointed by a lack of policy execution repeatedly in the past, investors are hoping things will be different this time. Overseas funds bought onshore China stocks for a fifth straight session on Monday, taking net purchases since the key meeting to 49 billion yuan ($6.7 billion).

“The government’s stance has clearly turned more supportive,” said Vey-Sern Ling, managing director at Union Bancaire Privee. There is more confidence that China will back up stimulus talk with concrete measures, he added.

READ: Everything China Is Doing to Juice Its Flagging Economy

To-be-sure, China’s economic recovery continues a concern and it remains to be seen how soon and how much of an impact can the latest measures make. Economic activity lost more steam in July with manufacturing contracting again and the services sector weakening, data showed on Monday.

Further, Beijing has stopped short of providing direct fiscal support to consumers and the latest steps are targeted toward improving the supply of goods in the economy, rather than demand.

The Hang Seng China Enterprises Index, which tracks the nation’s stocks listed in Hong Kong, jumped as much as 3.2% on Monday before finishing 1.3% higher. It surged 6.1% surge last week. The CSI 300 Index of mainland shares rose 0.6%. Both measures posted their best monthly gain since January. A Bloomberg Intelligence gauge of real estate shares came close to entering a bull market.

The rebound in Chinese stocks is reminiscent of the impressive surge seen over the November-January period, which came after the nation dismantled stringent Covid curbs and reopened its economy and society. Poor economic data, persistent property woes and geopolitical tensions then combined to dent sentiment, and investors have since sold into intermittent rallies. Implementation of policy promises is therefore a must to sustain the latest rebound.

“We still believe last October was the long-term trough of Chinese markets,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “On the shorter-term basis, there would be some volatilities but the lows should be getting higher” as China isn’t facing inflation and valuations are at deep discounts to major markets.

Earnings Support

China should provide easier access for mid- to long-term funds to invest in its stock market as “stabilizers” and guide household savings to the market as part of its capital market reform, China Securities Journal said in a front-page commentary Monday.

Some better-than-expected earnings reports, including those from restaurant operator Haidilao International Holding Ltd. and battery maker Contemporary Amperex Technology Co., have added to the positive sentiment.

“The upcoming earnings results will be a factor, and although expectations are not high, a continued recovery in big tech earnings would support the rally given the weighting in China indices,” said Marvin Chen, a Bloomberg Intelligence analyst.

Jefferies Financial Group Inc. analysts including Calvin Leung and Shujin Chen are “positive” on the market and the property sector for three-to-six months, they wrote in a note dated July 30. However, they added that some investors may sell when city-level policies start to roll out, given the lagging impact on the physical market.

--With assistance from Abhishek Vishnoi and April Ma.

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