CHN50 Jumps as China Halved Stamp Duty to Revitalize Stock Markets
CHN50 Analysis
China's post-pandemic recovery is faltering as indicated by a series of disappointing economic data over the past several months, which reflects poorly on the stock markets, with CHN50 having a bad August. In an effort to revitalize equity markets, authorities halved the stamp duty on stock transactions to 0.05%, starting today [1]. To further boost activity, they also lowered margin requirements to 80% (form 100% preciously), effective September 8. [2]
China's equity stock markets reacted positively to the news and CHN50 jumped up to 4.5% earlier today. This brings August highs 13,601 is the spotlight, but we remain cautious around the ascending prospects of the index.
Chinese authorities have vowed to support the economy and have already taken action in that direction, but so far, they appear reluctant to embrace big stimulus. The stamp duty cut, can boost markets in the near term, but does not really address the economic slowdown and the renewed woes around the troubled property sector.
As such, equity markets remain vulnerable and CHN50 already erases much of the initial surge. Below the EMA200 (black line) bias is on the downside and the index is in risk of fresh 2023 lows (12,261) towards 11,908, but may be early to talk about further losses.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 28 Aug 2023 https://english.www.gov.cn/news/202308/27/content_WS64eb30fdc6d0868f4e8dedd2.html | |
| Retrieved 10 May 2024 https://english.www.gov.cn/news/202308/28/content_WS64ebdecfc6d0868f4e8dede8.html |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.