China Equities Look To Break Above Downtrend Resistance

Outside of Japan, regional equity markets have mostly started the week off in a positive fashion. US equity futures were in the red early doors, but are back in positive territory, albeit modestly (+0.10/+0.15%). Much of the focus has been the continued rise in China equities.

• The CSI 300 is up 2% so far today, putting he index above downtrend resistance. This is extending last week’s breach of the 200-DMA, in what is the first foray above that technical parameter since ’21. The market continues to trade the move away from the country’s ZCS framework and signs that the regulatory clampdown on the Chinese tech giants is coming to an end.
• Northbound equity flows continue, with close to 75bn yuan so far in 2023.
• The HSI is up 0.73%, while the Kospi (+0.84%) and Taiex (+0.57%) also continue to press higher.
• Japan stocks are laggards, the Nikkei 225 off by 1.20% so far. The threat of higher yields, coupled with a firmer JPY backdrop, not helping at the margins.
• Only the Straits Times and Malaysian equity bourse are down today.