Chinese market sentiment improves 📈 HK.cash gains 2.2%

Market sentiment in China improved significantly after Beijing authorities announced on Friday that they would support the real estate market. On Sunday, they decided to reduce the required collateral levels and halved the stock turnover tax. According to Bloomberg, officials also asked domestic investment funds to halt stock sales. The reduced concerns about the state of the Chinese market supported sentiment on Wall Street today, where major indices are also gaining.

• A significant portion of today's gains in the Chinese indices (similar to Friday) has been reduced, but in the latter half of the session, futures contracts for HK.cash are increasing their gains. Global investors were supposed to sell shares of Chinese companies worth about $1.1 billion USD today.

• Although whether this will help the market in the long term is becoming uncertain, some suggest that the risk premium for investing in China, given current valuations, has become attractive. However, Morgan Stanley still does not share this 'contrarian optimism' towards China. They warned of a deflation scenario and a potential 'lost decade' similar to Japan's situation in the 1990s.

• Yet, markets live in the moment, and investors have returned to Chinese stocks today, with gains seen in Alibaba (BABA.US), Baidu (BIDU.US), and Tencent (TME.US).

From the oversold RSI levels below 30 points, the HK.cash index has already recovered a significant portion of its losses, and the declines stopped at the 61.8% Fibonacci retracement of the upward wave from the autumn of 2022. The resistance is still the SMA100 (black line) at 18,450 points. Source: xStation5.