Chinese indices are attempting to return to growth, after 6 down sessions in a row. Recent heavy-handed action by market regulators has only temporarily improved sentiment around Chinese blue-chip stocks. After a disastrous last week, the Chinese session was mixed, with the major indices gaining slightly, but the CSI1000 and CSI2000 indices of smaller company stocks closed the session with massive declines of 6.8 and 9.4 per cent respectively.
- The latest IMF forecasts show China's GDP slowing from 4.6% in 2024 to 3.5% in 2028. At the same time, US 10-year bond yields reached new monthly peaks at a time when the market, following Fed Chairman Powell's weekend comments, revised expectations and moved the expected cut date to May versus the previously forecast March (pro-dollar, negative for EM).
- While the previous two weeks have shown that central actions to help the equity market do not necessarily help 'for long', China is not about to give up. On Sunday, China's regulator promised to stabilise the market after equities hit their lowest levels in five years.
- However, it did not announce any concrete measures, although it said it would tackle 'bad faith' short selling and attract more investment through long-term capital. Analysts at First Seafront Fund Management, however, stressed that all attempts to support the market so far have been insufficient and there is still no strategy on the horizon to pull the indices out of the slump.
HK.cash index (H1)
Source: xStation5
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