China A50 LONG

2021年4月11日

One of the first actions of the Biden administration was to accuse China of genocide in Xinjiang and of undermining the rules-based world order with its actions toward Hong Kong and Taiwan, and its treatment of Muslim Uighurs in its Xinjiang province. The poor tone of the talks contributed to – but was not the only factor – the sharp drop in Chinese equity markets in mid-February, with the China A50 extending several weeks of under performance against major global markets that instead are overbought mainly due to liquidity, and banking on the “reopening trade”. The China A50 fell 2.4% with higher inflation and US/China relations causing some negative sentiment. Data showed a recovery in domestic tourism close to pre pandemic levels. The data suggested that China’s vaccination drive is encouraging domestic consumption. The consumption catch up is expected to be a major growth driver in 2021 performance. China’s vaccination rate is about 5 million per day, a rate that puts it on track to meet the governments goal of vaccinating 40% of the population by the end of June. China reported that March consumer prices rebounded slightly more than expected, though its wholesale price inflation rose much more than anticipated sparking concerns of inflation.

All in all, it looks like a double bottom is forming at 16900. Price seems to be trading sideways in a narrow range between 16800 - 17800. At these levels, the underperforming Chinese index looks more attractive in terms of risk and reward.

Makes me want to buy some, but first I wait for a bounce on the 200 day EMA.