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CHINA STOCKS
Corrects reference to key downtrend support to key downtrend resistance
China’s CSI 300 is currently testing key downtrend resistance, having rallied by more than 15% from the ’22 cycle lows. This is extending last week’s breach of the 200-DMA, in what is the first foray above that technical parameter since ’21.
- Fundamentally, the rally has been aided by Chinese policymakers’ move away from the country’s ZCS framework, signs that the regulatory clampdown on the Chinese tech giants is coming to an end, fiscal support measures, a particular focus on strengthening the Chinese property sector (given its large weighting in the country’s GDP) and continued loose policy settings (alongside expectations for further easing) from the PBoC.
- Accordingly, inflows into Chinese equites via the HK-China northbound channels total ~CNY69bn YtD (including today’s session), with only one day of net outflows observed via those channels since the turn of the year.
- Underweight global fund holdings in Chinese equities give scope for further room to run, providing the flow and fundamental backdrops remain supportive.
- Note that the 14-day RSI is in overbought territory (printing at 74.82), although this isn’t considered truly bearish until we see a breach back below the 70.0 level.
Fig. 1: China CSI 300 Index
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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