The Chinese economy will produce the latest GDP figures for Q1 that could move the CH50 index.
CH50 – Weekly Chart
The CH50 stock index has hit resistance at the 13,300 level and closed lower. The support is at 12,800 before a more significant decline. The 13,300 level opens the door to more considerable gains.
The big theme for money managers recently has been a pivot to emerging market economies as the developed nations struggle and near recession.
China is expected to announce a strong bounce this week as the country ditched covid restrictions last year. The economy was hampered by restrictions the previous year that put the brakes on solid growth. The GDP release will give the first snapshot since 2019 of a Chinese economy free from health restrictions. Analysts expect an average of 3.8 percent year-on-year growth for Q1.
GDP Report Marks Pivotal Moment In Chinese Stock Market
However, the world’s second-largest economy struggles with the property sector, slowing consumer confidence, global inflation and a recessionary threat.
“The recovery is real, but still in its early stage,” said Larry Hu, chief China economist at Macquarie.
He added that a rebound “will be gradual, largely due to the weak confidence” of consumers, which in turn makes companies “reluctant” to hire more staff.
China’s economy grew by only three percent last year, one of its weakest performances in decades. It posted a 4.8 percent expansion in the first quarter of 2022, but growth declined to only 2.9 percent in the year’s final three months.
Real estate was a big part of China’s recovery from the pandemic in 2020. However, slow demand is hurting the sector already, as plunging home prices and debts have left some developers struggling to survive. The latest GDP numbers could be a pivotal moment for the Chinese stock market in the year ahead.
Chinese shares tracking the ChatGPT buzz have also lost momentum as investors await first-quarter results, with an index showing the worst weekly drop since November. Money managers are looking for warnings from firms about their capability on the AI front as they also consider Beijing’s plans for greater industry oversight.
Traders have access to the key resistance level in the CH50 and should trade the GDP numbers for a decline or a breakout.
