Chinese index futures (CHN.cash) did not react optimistically to Chinese President Xi's meeting with representatives of key US companies.Xi met with CEOs of companies such as Apple, Qualcomm FedEx, and Blackstone. China also hosted delegations from the World Bank or the International Monetary Fund this week. However, so far, investors have learned nothing about constructive conclusions from the talks, which drags down sentiments on Chinese markets
- The media have not announced that any of the businessmen have announced more investment in China, or have been enthusiastic about expanding in the market there. This is the market may perceive as a disappointment and a confirmation of the thesis of a still uncertain future of trade with China, especially after US technological sanctions on chips;
- President Xi has expressed confidence that China will grow, and it is not true that its greatest growth is behind it. However, this is contradicted by data that investors consistently track; China's population in 2100 could be around 550 million and shrink by almost 1 billion according to ; long-term concerns still include the aging population pressuring pension system and the real estate markets
- We can see the index's downward reaction as a signal that the stock market notoriously 'lacks faith' in Chinese optimism, although Xi stressed that relations with the U.S. have improved since his meeting with Biden in November 2023
- Foreign direct investment in 2023 fell 83% y/y in China, to the lowest levels in more than three decades. In January and February 2024, they recorded further declines of 20% y/y
CHN.cash (D1 interval)
Although the index managed to bounce back from the January minima, the upward momentum was again questioned, having reached the 6000 points area. There we can look for the 38.2 Fibonacci retracement of the 2023 downward wave and the SMA200 (red line). The main support is now provided by the SMA50 average (yellow line), the downward breakout of which, in an extreme case, may suggest pressure to test the January minima and 5000 target.
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Source: xStation5
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