Form a view, reporting it doesn’t help

The Shanghai Composite and CSI 300 Index have risen 10% over the past 2 or 3 weeks.

Media reports simply reporting this adds little value.

https://www.bloomberg.com/news/articles/2024-02-24/enjoy-the-rally-while-it-lasts-is-china-stock-traders-new-mantra?sref=qLOW1ygh

My subjective observation of recent pessimism along with my empirical analysis lead to my weekend publication, “Macro Extremes” listing these indices in the ‘extreme oversold’ category in the few weeks prior to this ‘reported’ news.

While this rebound is encouraging, it should be treated as a ‘trade’ for now. This means I expect a small pullback. Some ‘sideways’ travel and consolidation would also be constructive for China’s equity indices.

A couple weeks ago, I highlighted 7 moments (in a private note) when the CSI 300 provided an entry point which pointed to reasonably probability of a trading bounce.

Today’s situation is also labelled as one of those.

February 25, 2024

by Rob Zdravevski

rob@karriasset.com.au