China indices extend rally 📈 CHNComp at highest level from mid-May

Economic data published today from China confirmed that the country's economic rebound has lost momentum. After several 'small' nods from the Bank of China to the faltering economy (lowering some interest rates, supporting the real estate market), the market is becoming convinced that the PBOC will have to do much more. The vision of a Chinese 'stimulus' fires the imagination of investors, while a weaker dollar and positive sentiment on Wall Street support the migration of capital to emerging markets. As a result, Chinese indices are gaining today, with CHNComp gaining 1% today and trading at levels not seen since May 19.

China's industrial production for May rose 3.5% y/y vs. 5.6% in April and slightly below expectations of 3.6%

China's retail sales rose 12.7%, versus 18.4% in April, also below 13.6% forecasts

China's fixed asset investment (first moth of the year) rose 4% vs. 4.4% forecast by Refinitiv analysts 

• China has a big problem in the form of the youth unemployment rate (16 - 24 years old) - this one set a new record and stood at 20.8% in May. Urban unemployment stood at 5.2%  
• All of China's recent readings, from factory data to home sales, loans and retail sales which is an important measure of consumer sentiment, show weakness (the y/y increase is due to the low base effect). Steel and coal production also declined on a monthly basis;
• The Chinese government in order to meet the 5% y/y GDP growth target that the PBOC chief recently confirmed will likely have to opt for much broader stimulation of the economy. It is worth noting, however, that even with economic stimulation, global capital inflows to China may be significantly limited due to geopolitical risks.

The CHNComp index is extending today's gains and has recently broken above the 38.2 Fibonacci retracement of the upward wave from last fall. The price also broke the SMA200 (red line) indicating a possible longer-term uptrend. Source: xStation5