Chinese equities have seen better Mondays…
The CN50 was down close to 14% a bit earlier in the session, after the NDRC presser left markets feeling uninspired. Many were looking for the presser to include a new batch of additional stimulus measures.
However markets didn’t get that, and Chinese equities were taken to the woodshed so far today.
But before the ‘I told you China stimulus was bearish’ victory lap gets out of hand, it’s important to view today’s move in the right context.
When something goes up over 40% in roughly two weeks, a punchy pullback at some stage should hardly be a surprise.
I’m sure this move has hurt both the late buyers who bought the lows, as well as caused emotional damage to the early sellers who blew up by trying to short this way too early.
A market that is experiencing this amount of volatility will have many victims so be careful out there. On a side note, we’ve seen so many articles and reports of big players in the market all scrambling to get some long exposures in everything China.
I would be surprised if those allocations will be shaken out so easily. I suppose the question is whether you think this stimulus is different and China means business or not.
This article was written by Arno V Venter at www.forexlive.com.
