Chinese authorities are considering a rescue package to stabilise its ailing stock market. This is not a surprising given how poorly FXCM's CHN50 basket has performed. On a longer-term monthly scale, CHN50 is sitting in a bearish channel between its lower blue and red bands. Moreover, the momentum-based RSI is languishing below 50, denoting an underlying bearish momentum.
China aims to secure approximately 2 trillion yuan by utilising state-owned offshore companies to acquire onshore stocks via the Hong Kong markets. It is hoped this will introduce stability to Chinese stocks. Policymakers also have access to another 300 billion yuan to buy domestic shares via state-owned financial enterprises such as China Securities Finance Corp, or Central Huijin Investment Ltd.
Chinese Premier Li Qiang did say that "We must take more powerful and effective measures to stabilise the market and confidence."
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.