By Samir Al Khoury
It seems that the positive momentum for Chinese stocks will prevail in the next stage, as many factors may support these stocks, including:
· Most of the Chinese economic data exceeded analysts’ expectations, such as the manufacturing purchasing managers’ index, which according to the official body registered a growth of 50.8 points, and according to Caixin, 51.1 points, which is the highest level recorded by this index for both sides in a year. The non-manufacturing PMI also rose, recording a growth of 53.3 points, which indicates the improvement and upward momentum of China’s manufacturing sectors and eases pressure on the Chinese authorities to stimulate the economy.
· Short selling operations decreased to the lowest level since July 2020, especially after government measures that prevented these operations.
· Increased appetite and investment flows for Chinese stock exchange traded funds.
· Chinese stock valuations are considered very low compared to other global stocks, such as Japanese and American stocks.
However, despite these positive factors, there are negative factors that may put pressure on the Chinese economy, as:
· The CPI on an annual basis, which recorded a growth of 0.7% in February, is still very far from the 3% inflation target.
· The real estate sector, which represents approximately 30% of China’s GDP, remains volatile.
· Tensions still exist between China and the United States of America regarding trade and technology and the restrictions they impose on each other regarding chips.
As for Chinese stocks, the CSI 300 index rose by about 16% from the bottom of February 2 this year, which recorded 3,108 points, to the peak that it recorded on March 19, 3,610 points, with expectations of its upward trend continuing. The index is currently hovering near the 3,600 points level.
It seems that technical indicators may support the CSI 300 index in the next stage for several reasons:
First: The index closed yesterday at 3,580 points, which is a level that exceeds the 50-day moving average at 3,437 points and is close to the 200-day moving average at 3,610 points. The next challenge lies in breaking the 200-day moving forward and surpassing it.
Second: The Relative Strength Index (RSI) is currently recording approximately 59 points and is above the 50-day level, which indicates upward momentum for the CSI 300 Index.
Third: The MACD indicator is in the positive zone, with the blue line closely approaching the orange SIGNAL LINE, signaling a potential upward intersection, bolstering positive momentum for the CSI 300 index.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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