CSI 300 index weekly chart
🔥 Chinese stocks are sizzling and it has been a while since we’ve seen such an upturn in sentiment in the region. After the over 15% gains last week, the CSI 300 index is up over 6% now at the lunch break. As seen with the chart above, the run higher already broke the downtrend since 2022 but it has also run back above its 100-week moving average (red line) now.
From last week: Is this the real turning point for Chinese equities?
The mood music at the moment is extremely positive but do be mindful that all of this is coming ahead of the National Day celebrations. That will see Chinese markets observe a one week break, starting from tomorrow. Domestic markets will only resume trading again on 8 October.
I reckon the real test and measure of the appetite we’re seeing now will come after the break period.
For now, Beijing has done well in rallying support and shoring up sentiment ahead of one of the patriotic times of the year. It’s a good showing to get people buzzing again as they visit their hometowns and families. But this is just the starting point really. They need to build on this and keep the momentum going to raise the economy back up from the dead.
The collapse in domestic demand has been a major issue for lawmakers and policymakers in the aftermath of the Covid pandemic. Now is perhaps their best opportunity to really get things on track again. However, the fiscal side of things really needs to play ball. So, we’ll see how Beijing follows up on that in the weeks ahead.
It’s all smiles in the past week for Chinese stocks. But let’s see if it can stay that way or if this ends up being yet another false dawn. The former is certainly an attractive proposition if it plays out. That considering Chinese valuations are still low, even accounting for the jump over the past week. It at least makes for another potential opportunity to chase in markets for the year and going into the next.