🚩 Chinese stocks at yearly lows

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.

CHN.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