China A50

The markets seem to be willing to look past the bout of Covid raging through China at the moment. As a result, traders see an opportunity to buy stocks.

If China continues to re-open its economy, slowly but surely, then the China A50 may continue to move higher as the economy begins to expand once again.

Cases have surged in the manufacturing hub of Guangzhou

China enjoys some deflation – something the West can only dream above for now. And the ASX is on track for a 4th day higher, but resistance is capping further gain.

Worries over stagflation, China’s ailing economy and more rate increases, disappointing US tech earnings...

Worries over stagflation, China’s ailing economy and more rate increases, disappointing US tech earnings...

China is struggling to restore confidence among investors

China is struggling to restore confidence among investors

Despite attempts to stabilise the yuan, USD/CNH has reached 7.000 as policies between the Fed and PBOC continue to widen.

China’s consumer and producer prices softened in August, yet signs of disinflation are also becoming apparent across other parts of China.

Poor economic data combined with the constant closing and re-opening of certain areas in China have the China A50 on its heels.

USD/CNH enjoyed its best day since the pandemic yesterday following China’s weak data, as Beijing seemingly to want to allow their currency to slide to help support the economy.

We revisit the China A50 to outline why we think it has seen a significant low, and could be set to return to a longer-term bullish trend.

China’s GDP is expected to have softened to 4.4% y/y in Q2, which would be its lowest level since June 2020.

Data from NBS (National Bureau of Statistics) expanded for the first month in four as lockdown restrictions were eased.

Whilst China’s inflation beat analyst’s estimates, weak producer prices leaves the prospects of further stimulus on the table.

Why the COVID outbreak across the country may well get worse before it gets better...