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An unnamed MLR official said the move was in line with the central authorities' comments made at the Central Economic Work Conference in December that "houses are built to be inhabited, not for speculation."

Analysts, however, noted that the drop came as workers are exhausting those benefits. Workers in most states are eligible for up to 26 weeks of benefits from the regular state program.

Analysts cited the ferocious efforts of international brands to expand their market share in China, the world's largest car market. Especially as Chinese customers had a preference for overseas brands, particularly in light of a slowdown in the market.

Analysts, however, cautioned about the downside risks from the COVID-19 epidemic and a potential sluggish recovery in demand. External demand could be hit by a worsening global pandemic or rising Sino-US trade friction, while the difficulties faced by small businesses could weigh on employment and domestic demand.

Analysts say investors sentiment has been lifted because oil markets were also driven by optimism following the talks between the two leaders, which exceeded market expectations.