China's Stocks Post Best Day in 16 Years

The country’s blue-chip CSI 300 index surged 8.5% on Monday, reaching its highest level in more than a year, following its strongest weekly gain in nearly 16 years.

The Shanghai composite had its best week since 2008, following the most aggressive stimulus measures since the pandemic.

Source:Factset

Last Tuesday, China’s central bank implemented a range of broad stimulus measures, including reducing mortgage rates, cutting interest rates, increasing bank cash availability, and providing liquidity support for the stock market.

And it worked like an adrenaline shot, waking up the investor’s appetite for Chinese equities!

Prominent hedge fund manager David Tepper was one of the first prominent investors to spark the animal spirits by replying, earlier last week, to the question of what’s good (in China)?

“Everything!”

Single stock names also had incredible gains last week.

JD.com the Chinese retailer whose stock Walmart (WMT) entirely dumped last month, jumped 12% in late Hong Kong trade on Monday.

Alibaba stock surged 20% in five days following China’s reserve requirement cut.

Chinese electric vehicle maker NIO stock jumped 17% on Monday, on the back of a $470 million investment from strategic investors in NIO China.

Source: Tradingview

KWEB, an ETF with its focus on publicly traded Chinese internet and technology companies, rose over 33% in the last few days and has been a popular investment instrument among market participants.

The FOMO (“Fear of missing out”) trade has been working as many foreign and domestic investors have pulled capital into the Chinese stock market on the back of the incredible momentum that Chinese markets have gathered.

The monetary easing stimulus has sparked a market rally, and potential fiscal support can keep the momentum going further.

Also, a lot hinges on whether Chinese companies can report healthy earnings growth to support investors’ confidence in them.

Investors can long Chinese indices and stocks using our 3x China Tech, 3x China, 3x JD.Com, 3x Alibaba, 3x NIO

Alternatively, traders can short Chinese indices and stocks using our -3x China, -1x JD.Com, -3x Alibaba, -3x NIO.

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