There is a familiarity that seems to be returning to life in mainland China. Amid all of the ongoing global uncertainty as a result of the pandemic, some may find it hard to believe that the situation in mainland China has normalised so quickly.

Yet this is precisely what I found on my recent visit to Shanghai from Hong Kong. In fact, traffic congestion was as bad as it was in the old days, before the need for lockdowns and other restrictions. Restaurants, meanwhile, were once again packed. Besides the mandatory two-week quarantine on arrival, I saw few signs of the health crisis.

We think the recovery will continue, aided by supportive policy and a robust test and trace programme. This should in turn continue to be positive for the performance of mainland stock markets.

How is the economic recovery evolving?

After shrinking 10.0% quarter-on-quarter (q/q) in the first quarter of the year, the economy bounced back in the second quarter, expanding by an impressive 11.5% q/q.

Industrial activity has led the recovery, and manufacturing is returning to more normal levels of operation. Although data in areas such as retail sales have also improved persistently, the consumer sector has lagged; partly due to weakness in areas such as travel, which are yet to fully recover.