Shanghai Stock Exchange Photo:CFP

Chinese stock markets including A-shares and Hong Kong-listed stocks rebounded on Wednesday after an earlier plunge on Monday, and the rebounding reflected market confidence in Chinese equities. 

A-shares closed up on Wednesday, as the Shanghai Composite Index rose by 0.78 percent, the Shenzhen Component Index edged up 1.68 percent, while the ChiNext Index surged by 2.52 percent. The Hong Kong Hang Seng Index closed up 0.84 percent. 

The offshore yuan against the US dollar rose back to the 7.21 mark on Wednesday, going up by more than 1,000 basis points. The onshore yuan against the US dollar closed up to the 7.20 mark, increasing more than 600 basis points.

The plunge on Monday was probably caused by uncertainty resulting from geopolitical tensions and other international factors, causing investors to sell off, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Wednesday.  

On Monday, the Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index dropped 2.02 percent, 2.05 percent, and 2.43 percent, respectively, according to Citic Securities. 

On the same day, the Hong Kong stock market plunged to a 13-year low, with the Hang Seng Index closing at 15,180 points, diving by 6.36 percent or 1030.43 points.

Hong Kong SAR Chief Executive John Lee Ka-chiu said on Tuesday that the government would closely monitor the Hong Kong stock market to ensure normal market order.  

Moving forward, institutional investors are expecting markets to bounce back and the confidence to be restored, the Securities Daily reported. 

Marko Kolanovic, JPMorgan's chief global markets strategist, said that the massive retreat of Chinese equities is "disconnected from fundamentals," noting that "we believe this is a good opportunity to add given an expected growth recovery, gradual COVID reopening, and monetary and fiscal stimulus," Bloomberg reported on Tuesday. 

The National Development and Reform Commission, China's top economic planner issued a comprehensive package of policies to support and improve the quality of foreign investment in China on Tuesday, with measures which allow foreign companies to raise funds on China's stock markets.