By ForexTime
On Thursday, key economic data from China and earnings from two Chinese e-commerce giants could trigger significant price swings on the CHINAH index.
But before we discuss how to take advantage of this trading opportunity, here are some fun facts about the CHINAH index:
Chinese shares have been on the decline over the past few weeks as China growth fears weighed on sentiment. Since May, FXTM’s CHINAH has recorded two consecutive months of losses and currently down over 1% in August.
Free Reports:
Here are 3 forces that may move the index on Thursday:
The People’s Bank of China (PBoc) is expected to maintain its one-year medium-term lending faculty (MLF) rate at 2.3%.
So much focus will be on the barrage of data release, including the industrial production, retail sales and jobless rate among other key reports. Ultimately, better-than-expected data could boost confidence over China’s economic outlook – stimulating appetite for riskier such as the CHINAH index. Should overall economic data disappoint, this may drag the stock index lower.
Alibaba accounts for almost 9% of CHINAH’s weighting – claiming the title of biggest stock within the index.
This alone suggests that its earnings release before US markets open on Thursday could translate to heightened volatility for the stock index. Markets are forecasting Alibaba’s US listed shares to move 5.7% either up or down when US markets on Thursday.
Much focus will be on any updates regarding its cloud and AI-related efforts. Should the Chinese e-commerce giant’s earnings exceed market expectations, this may push Alibaba shares higher along with the CHINAH index.
It will be wise to also keep an eye on JD.com which accounts for just over 2% of CHINAH. Markets are forecasting JD.com US listed shares to move 6.4% either up or down when US markets open on Thursday, just hours after its earnings are announced.
Investors will direct their attention toward profitability and how its e-commerce business performed in Q2 amid the fierce competition among major players in China. A strong set of results may support JD.com stocks along with the CHINAH index, and vice versa.
The trend remains bearish on the daily charts as there have been consistently lower lows and lower highs. However, bulls seem to be lingering in the vicinity with prices trading near a key daily resistance at 6100.
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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