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Mainland Chinese shares are trying to recover from five-year lows and it looks like Beijing is ready to take some action. At least that’s what Marko Papic, chief strategist at Clocktower Group, believes. He told me last week that based on a Bloomberg report of Chinese President Xi Jinping’s potential meeting with financial regulators, he thinks Chinese stocks could see a short-term rally of 10% or more in the coming days. But what Papic is seeing in the markets is a rise in Chinese government bond yields. “One of the best tradeoffs for Chinese assets is to be long-term bonds, which perform best in the world,” Papic said. “My question is, will it improve? [the] “Will the Chinese economy and stock market see the end of the multi-year rally in Chinese bonds?” he said. “Something to think about for global bond investors. You will know when the yield starts increasing [it’s a] floor [in the] economy.” When yields rise bond prices fall and vice versa. According to Wind Information, Chinese 10-year government bond yields trade at about 2.6% versus just over 4% for its US counterpart. If If Chinese bond yields start to climb, Papic said, that will likely signal that investors are moving out. It’s not clear whether those investors are ready to buy stocks yet. The Shanghai Composite declined 1.1 percent on Thursday. closed up more than 50%, helping the index recoup some of its losses from the last day of 2014. Trading ahead of the Lunar New Year holidays. Mainland Chinese stock markets are closed and will not reopen until Monday, February 19. “China’s recent measures to support the stock market are welcome and should probably stabilize markets, but given the continued relief rally, we think China will will need to address the core concerns of investors i.e. property sector/economy and US-China relations.” He expects that if sentiment remains weak, there is still scope for foreign capital. Sell mainland Chinese and Hong Kong stocks. Consumer price data on Thursday was not encouraging as it showed another month of weak demand, including in sectors like travel. Thursday’s stock market gains also followed news that Beijing had announced a day earlier that it had fired Yi Huiman as head of the securities regulator and replaced him with Wu Qing, who once served as the head of Shanghai. Used to oversee the stock exchange. For the Eurasia Group, such change was a predictable outcome of Xi’s high-level involvement. Earlier this year, Chinese authorities had begun formulating a strategy to direct domestic investment into stocks, analysts said, and previously acknowledged to the consulting firm that this would require “the macro environment and the profitability of listed companies.” “Both will require change.” But by January, many of these contacts had set their sights on a continued focus on leadership promotions, security and administrative control,” Eurasia Group analysts said in a report. ” These policy signals reinforce expectations of a continued incremental approach to the Eurasia Group’s economic and development policy and the prioritization of tight regulation of financial activities.” This came after markets returned from a week-long holiday in China, the biggest holiday of the year. The debate will continue. The Hong Kong Stock Exchange is closed for holidays only on Feb. 12 and 13. “For now, with short-term liquidity risks low, investors remain bullish on inflation/housing market trends this year,” UBS equity strategists said in a report on Wednesday. His top mainland Chinese A share picks, according to the biggest expected growth, are solar energy supplier Sungrow and Semiconductor The equipment manufacturers are Naura Technology, listed in Shenzhen, and Shanghai-listed Tuopu, an auto parts supplier to Tesla. UBS analysts expect Sungrow shares to more than double from Tuesday’s levels, while Tuopu shares could climb as much as 90% and Nora Technology could see gains of more than 50%. — CNBC’s Michael Bloom contributed to this report.