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China Stocks Due for Rebound After 4-Day Slide

China stocks are due for a technical rebound after sliding for four days but global uncertainties and slowdown worries may keep gains limited.

The Shanghai Composite dropped 1.21 percent on Wednesday to end at 2346.19.

Reports Thursday that the Big Four banks were showing stagnant lending growth in early May reinforced fears that the economic slowdown was continuing.

Market Factors

Two top financial chiefs are set to talk reforms on each other's turf. At a securities forum, People's Bank of China Governor Zhou Xiaochuan says the central bank will step up cooperation with the securities regulators to support the capital market, increase quotas for foreign investors. Meanwhile, Securities Regulatory Commission Chairman Guo Shuqing talks about boosting the yuan's convertibility on the capital account. The rhetoric is mildly positive for market sentiment.

Stocks to Watch

Shares of appliance makers, LED-lighting companies, and auto stocks are the ones to watch.

The Chinese cabinet unveiled fresh incentives to boost domestic demand, earmarking 26.5 billion yuan this year as cash subsidies for purchases of energy-efficient appliances such as washing machines, fridges, air conditioners, flat panel TVs, and water heaters. In addition, there will be 10 billion yuan of subsidies to promote sales of LED lighting, "green" vehicles and energy-saving electrical motors.

—By Cheng Lei, CNBC Asia Pacific