CHN.cash loses 1.5% as investors sentiments waned 💥
- Higher-than-expected Caixin manufacturing PMI reading failed to improve sentiment on Chinese indices
- Stock market discounts 'desperate' attempts to improve sentiment around domestic financial market
- CHN.cash close to yearly lows of late October and 71.6 Fibonacci retracement of November 2022 surge
- J.P. Morgan and HSBC see no growth catalysts to improve sentiment in China
China's manufacturing PMI data published today by Caixin came in at 50.7 versus 49.6 forecast and 49.5 previously, but failed to turn around sentiment in the Chinese stock market. Representatives of the Beijing Stock Exchange were said to have recently influenced majority shareholders of Chinese companies not to divest their shares. What's more, according to Reuters sources, representatives of China's third-largest investment bank CICC were told analysts not to publish 'bearish views' on the Chinese economy and not to publish content inconsistent with the government's narrative. As we can see today, markets read such rumors as a warning signal.
Nor has Xi Jinping's recent visit to the U.S. caused foreign capital to begin flowing more decisively into China. The MSCI China index, which tracks the listings of nearly 700 Chinese companies, has lost more than 11% this year, while indexes from mainland China and Hong Kong have erased nearly $1 trillion in capitalization since July 2023. The Hangseng index alone has lost more than 16% this year, compared to a 46% rally on the Nasdaq100, a 30% rally on Japan's Nikkei and 16% gains on Germany's DAX index. Analysts at J.P. Morgan indicated that for China, the situation 'could get much worse before it gets better. The country faces the specter of a real estate market crisis, 'shadowbanking' related loans and deteriorating private sector sentiment.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appCHN.cash chart (D1)
Looking at CHN.cash futures trading, we see that all attempts at increases so far have ended in supply, and the index is testing the vicinity of one-year lows. A breakout below the 71.6 Fibonacci retracement in 'worst case scenario' may even indicate a test of 4900 points, i.e. the oversold levels of November 2022, when markets panicked over Xi Jinping's assumption of a new term in Chinese communists party.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
