(Bloomberg) -- Traders took China’s reiteration of the Covid Zero strategy in their stride, focusing instead on an eventual reopening and continuing to scoop up the nation’s battered shares. 

That meant another day of gains for equity indexes in Hong Kong and China as they try to stage a sustainable rebound after months of heavy losses. Tech and property shares -- ones that have been beaten down the most -- were the biggest advancers in Monday’s session. 

The market exuberance defied stern weekend comments from officials at the National Health Commission, who sought to dispel wild rumors over a reopening by pledging to “unswervingly” adhere to Covid restrictions. At the same time, they criticized cities overzealous in their pandemic controls -- something that seemed to appeal to traders’ hopes that a larger policy pivot is on the way. 

Read: Greater China Stocks Love Reopening Even If It’s a Myth

“Sentiment on Chinese stocks is so low that any potential catalyst would send stocks racing,” David Chao, global market strategist for Asia Pacific ex-Japan at Invesco Ltd. “Pent-up money sitting on the sidelines is chasing this rally. If you look at the stocks that have benefited, it’s the large-cap tech stocks and I’m not surprised.” 

The Hang Seng China Enterprises Index ended up 2.8% to extend last week’s rally, which was the biggest since 2015. A separate gauge of Chinese tech stocks in Hong Kong jumped more than 4%. The yuan still weakened against the dollar, with the offshore unit weakening 0.7% after Friday’s 2% surge.  

With the likes of Goldman Sachs Group Inc. projecting strong gains in the event of a full China reopening, investors are eager to take positions early.

The market will pre-trade any actual reopening about a month in advance, and the positive momentum may last for two to three months, strategists at Goldman wrote in a note dated Sunday, saying a complete China reopening will drive a 20% gain in equities. 

Read: China Stocks May Rally 20% on a Full Reopening, Goldman Says (1)

“Although the press conference thwarted some hopes of a faster reopening, there have been adjustments at the local level to avoid excessive Covid restrictions, which investors could consider as a slight positive,” said Shen Meng, a director at investment bank Chanson & Co. in Beijing. “So while there could be some volatility, the overall market should remain stable.”

After health authorities criticized overly excessive virus curbs, the city of Zhengzhou pledged to take targeted Covid controls. 

Tech Optimism 

Tech stocks rose again after a dizzying rally on Friday, when Bloomberg News reported progress in efforts to prevent the delisting of hundreds of Chinese stocks from US bourses.   

Shares related to reopening were mixed. While airliners including Air China Ltd. and China Southern Airlines Co. and restaurant chains gained, China Tourism Group Duty Free Corp. and Tongcheng Travel Holdings Ltd. fell more than 2% each in Hong Kong.  

Markets have been on a roller-coaster ride in recent days. A rout ignited by President Xi Jinping’s power grab and defense of Covid Zero at the Communist Party Congress was erased by last week’s surge, when speculation that China is moving toward reopening sent everything from equities to oil on a frenzied upswing.

On the mainland, the CSI 300 Index closed up 0.2% after earlier falling 0.6%. Trading volume on key gauges jumped, with that for the Hang Seng China index reaching double the three-month average. 

“People should continue to monitor the details rather than the overall tones because the overall tones are not going to be different from what’s said in the 20th Congress,” Hao Hong, a partner at Grow Investment Group, said on Bloomberg TV on Monday.

Read: China Stock Frenzy Enters Overdrive on Hopes That Worst Is Over

--With assistance from Wenjin Lv, Chester Yung, John Cheng and Abhishek Vishnoi.

©2022 Bloomberg L.P.