Last week, we alerted investors to a support level in the Chinese stock 50 index and saw a perfect bounce from that level.
The National Congress is coming to an end. It could add positive sentiment while global stocks try to catch a bid on Monday.
CHI50 – Daily Chart
The CHI50 found support at the March low of 12,375 and has pushed higher.
Michael Audeban of Gemway Assets said of China:
“We should not lose sight of the fact that, economically speaking, China is not a Communist country. Now, it is certainly not a democracy in terms of individual freedoms or how it holds elections. Yet, economically, the country is entirely liberal, far more so, in fact, than France. To us, the worst of the economic bad news concerning China is behind us. It has already been factored into the plans of asset managers.”
Asset managers are aware of the effects of the recent lockdowns, and investment capital has fled to India. Still, that trend can reverse when the country reopens, and China can return to a strong growth trend.
President Xi Jinping reaffirmed China’s commitment to the zero covid policy, which will now hinge on infection rates. Investors see this as a good level to buy into Chinese stocks and hint that we are getting near to a low in the market.
