Chinese stock market had a disappointing start to 2016 as stock trading was suspended for two days in the opening week itself due to plummeting numbers. After Beijing announced new rules on stock trading and rumoured to have ordered the state-owned investment funds to buy, the market sentiments are seen calming down. However, the investors are still concerned as stock price volatility remains elevated. The slump is seen driven by correction and psychological factors rather than a slowdown in the economy.

Traders are likely to be bearish on China after December PMI data failed to impress the markets and lack of interventions on CNY weakening.

"We maintain the same view from last summer: the stock market turmoil will likely have no major impacts on the real economy" - Nordea Bank.