Last week, the Chinese financial markets experienced a significant downturn, marking a historic negative performance across key indexes. However, this week tells a different story, one of recovery and resilience, largely fueled by revived support promises from Beijing.
Beijing's Renewed Support Sparks Optimism
The decline in Chinese capital markets has been significant since the beginning of the year, a trend that has been continuing for quarters. This gloomy context has prompted Beijing to react. Discussions surrounding further support from Beijing have notably shifted the market's momentum. A critical player in this turnaround, the sovereign fund Central Huijin Investment Ltd, has announced its intention to purchase more ETFs, a move that has injected optimism into the equity market.
China Indexes and ETFs Bounce Back
The statement of the sovereign fund is reflected in the weekly figures, with the FT Wilshire China Index climbing 2.47% over the week. Chinese ETFs have shown even stronger performance, growing 4.31% during the same period. This surge has not only indicated a market rebound but also spotlighted China-related themes among the week's top performers. Specifically, China Disruptive Technology and China Digitalization ETFs enjoyed substantial gains, up 3.48%, and 3.38% respectively.
China's Market Rebound Slows Before Lunar New Year
Despite the week's notable recovery, cautious optimism prevails as the market's rebound showed signs of slowing down in anticipation of the Lunar New Year’s holidays. This deceleration suggests that while the immediate future appears brighter for Chinese ETFs, investors and market watchers will be keenly observing if this momentum can be sustained post-holiday.