CSI 300 weekly chart
🔥 Chinese stocks are very active, and it has been a long time since we have seen such an improvement in sentiment in the region. After gaining more than 15% last week, the CSI 300 is now up more than 6% on the lunch break. As shown in the chart above, the rally has already broken the downtrend since 2022 but is also back above the 100-week moving average (red line) now.
From last week: Is this the real turning point for Chinese stocks?
The mood music at the moment is very positive, but keep in mind that all of this comes before the National Day celebrations. This will see the Chinese markets observe a one-week break, starting tomorrow. Local markets will not resume trading again until October 8.
I think the real test and measure of appetite that we are seeing now will come after the break.
For now, Beijing has done well to rally support and boost sentiment ahead of one of the national times of the year. It’s a good show to get people interested again as they visit their cities and families. But that’s just the starting point really. They need to build on that and maintain the momentum needed to lift the economy from the dead.
The collapse of domestic demand has been a major issue for lawmakers and policymakers in the wake of the Covid pandemic. This may be their best chance to get things back on track again. However, the financial side of things really needs to be played out. So, we will see how Beijing follows up in the coming weeks.
It was all smiles last week for Chinese stocks. But let’s see if it can stay that way or if this will end in another false dawn. The former is certainly an attractive proposition if implemented. Taking into account that Chinese ratings are still low, even taking into account the jump that occurred over the past week. It at least provides another potential opportunity to chase this year’s markets and move into the next.