Chart of the day - CHNComp (24.10.2022)

Chinese indices are in freefall today. A sell-off is explained as reaction to Chinese Communist Party congress that saw President Xi secure a third 5-year term and reinforce his grip on power. No major economic and social policy changes were announced during the congress, sending a strong signal that current policies will be continued. This includes an approach to tech companies, meaning that tech crackdown will likely continue in China. A release of delayed Q3 GDP and September's activity data that turned out to be better-than-expected led to only brief relief. The Hang Sech Tech index was plunging over 10% today. Broad market indices, like Hang Senf and HSCEI (CHNComp), performed better but also took a significant hit. Hang Seng dropped over 6% while HSCEI traded 8% lower on the day. CHNComp dropped below a short-term support in the 5,400 pts area and continued to move lower. Two levels to watch on the chart in case declines continue to deepen are psychological 5,000 pts area and a 161.8% exterior retracement of the March upward correction (4,930 pts).

Source: xStation5