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CHINA STOCKS
Monday's tech underperformance wasn't limited to U.S. equities, with the ChiNext shedding ~5.0% on the day as the index entered technical bear market territory, closing ~21.5% shy of its YtD peak.
- Firmer policymaker rhetoric re: risks to the economy via bubbles and a generally harder line against leverage have crimped the Chinese equity market rally in recent weeks, with China's official GDP growth target for '21 also underwhelming (although some would argue that gives policymakers more wiggle room to promote success if the country provides a significant beat vs. target).
- From a technical perspective the 200-DMA nears, with the 50% retracement of the move from the March 2020 lows to the YtD highs providing the next level of support if the 200-DMA gives way.
- Bigger picture, 6 of the last 10 sessions have seen net outflows from Chinese equity markets via the northbound leg of the Hong Kong-China Stock Connect schemes, with the 20-day rolling sum of net northbound flows printing at the least positive levels seen since November.
Fig. 1: ChiNext Index
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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