Chinese indices are soaring today, with HK.cash traded almost 2.2% higher as investors reacted to the announcement of financial market reforms at a Chinese financial forum in Lujiazui. Also, China's stock market watchdog CSRC announced increased regulation of short selling in the Chinese stock market, saying it would severely punish any irregularities. Moreover, Nvidia (NVDA.US) became the biggest public-traded company in the world yesterday, which clearly improved sentiments among Chinese tech stocks. Recent data for May, from China's economy, came out mixed, with higher industrial production, but weaker than expected retail sales and housing prices dropping further. Despite on that, investors see hope in improving market standards, fostering interest in the Chinese stock market. Markets are also waiting for more political support from Chinese officials scheduled to meet in July.
- Bank of East Asia expects that further stock market reforms will improve foreign interest of Chinese stock market amid higher reporting and management quality. Chinese top stock market watchdog chair, Wu Qing unveiled new measures to reform the technology board, focusing on mergers, offering and other incentives to promote Chinese tech innovation
- Shares of Chinese technology firm Lenovo surged today almost 8% as Morgan Stanley analysts said that the company will be the main beneficiary of the AI PC boom among Asian countries. Also, HSBC bank expects Lenovo’s AI PC penetration rate to rise. Analysts has raised its target price to HK$13.5 from HK$11.7 recently. Also, another AI-related stock, Xiamoi surged by 4% as euphoria across US Nvidia shares spread abroad, reaching also Chinese sentiments
- According to Grasshopper Asset Management, Chinese policies announced in May and June are generally favourable for the falling property sector, signalling that China prioritises effort to end a crisis among the weakening sector. Despite on that, investors reacted especially positively with buying spree among Chinese tech firms, and the reason of that may be in AI-related Nvidia stock price rally as Chinese markets are seeking out national companies, which may also benefit from AI.
HK.cash chart (D1 interval)
Chinese index rebounded again from the support zone of SMA50 (orange line) near 6300 points and the strongest resistance zone is now located in 7000 points zone, where we can see previous two significant price reactions and 71.6 Fibonacci retracement of the downward wave since the beginning of 2023.
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Source: xStation5
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