Overseas investors still wary despite a strong rebound

Overseas investors are still cautious toward A shares despite a rebound on Monday, as international fund managers warned the A-share market may continue to slide due to expensive valuations, and disorderly deleveraging may tighten liquidity.

The Shanghai Composite Index rose by 2.4 percent and the large-cap CSI 300 surged by nearly 2.9 percent on Monday, after the government announced a series of market stabilization measures during the weekend. The Shanghai Composite Index has tumbled nearly 30 percent in the past three weeks on concern leveraged traders are liquidating bullish bets as equity valuations exceeded levels seen during the country's stock market bubble in 2007.

Despite the rebound on Monday, foreign investors turned net sellers of 18.45 billion yuan ($2.97 billion) of A shares through the Shanghai-Hong Kong Stock Connect program, the highest sell trade value since the link started in November.