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– This is the script of CNBC's news report for China's CCTV on August 16, Tuesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Concerns over the state of the Chinese economy have started to loom again as the country's shares hit a seven-month high Monday on speculation of more stimulus from the Chinese central bank.
The country's blue-chip CSI 300 jumped 3.3 percent Monday, lifting sentiment across Asian stocks. While investors have heard nothing from the People's Bank of China (PBOC) officially, analysts are starting to predict that more easing could come soon.
China published weaker-than-expected investment, lending, retail spending and factory output data on Friday. This after a raft of poor numbers this month started to concern investors of a Chinese slowdown..
"This ongoing slowdown is pushing speculation of more monetary stimulus higher," Christophe Barraud, chief economist at U.S-based financial services firm Market Securities told CNBC via email.
"However, the PBOC prefers using more-targeted easing measures such as liquidity injections - by choosing whether or not to roll over funds as they come due - rather than using conventional tools such as RRR (reserve requirement ratio), rate cuts. I believe that the PBOC will keep a low profile until the yuan is officially included in the International Monetary Fund's special drawing rights (SDR), expected to be in October."
The Chinese renminbi (yuan) will join the SDR basket of reserve currencies on October 1, 2016.
But China needs to do more to impress the IMF.
In a report released last week, the IMF said China was struggling with slower private investment and weak external demand.
Saker Nusseibeh, chief executive officer at Hermes Investment Management told CNBC Monday that the Chinese government may not do something immediately on the IMF warning, but will be working to improve the imbalance, particularly in the regional banks in the near future.
Meanwhile, some analysts have pointed to China's rally also being fuelled by renewed hopes for the launch of the Shenzhen-Hong Kong Stock connect in 2016. Local media reports have cited that this scheme would be launched officially in December and would allow investors from both regions to buy each other's stocks.
"China A-shares have strengthened in August, with the potential launch of the Shenzhen-Hong Kong Connect driving the latest move up," Daryl Liew, head of portfolio management at Reyl Singapore told CNBC via email.
[KEN (t) WONG, Eastspring Investments, Asia Equity Portfolio Specialist] "(The HK exchange) They want to go ahead with this asap, but then, don't forget there's other side of the party, which are the regulators in China. So unless CSRC gets its blessings, in terms of when they want to start this, you know, everybody's still on hold. So the past week, there's a lot of noise that's been made, that's definately helped the stock markets, but at the end of the day, there's still a lot of speculation until we finally hear something from the Chinese regulators."
Daryl Liew said China A-shares have de-rated significantly from the peak levels a year ago and are currently trading at reasonable levels at a forward PE (profit-to-earnings ratio) of 12.5x, in the middle of its 5-year range.
With many equity markets trading at relatively expensive valuations, China's stock market is looking rather attractive.
But while the stock market might remain attractive, concerns about the larger economy continue to loom. China has been struggling with its debt-ridden regional banks for a long time now. According to an analysis of China's 765 regional banks by UBS Global Research, the recapitalization and bailouts have started and have made unexpected progress.
CNBC's Qian Chen, reporting from Singapore.