Chinese markets are in freefall at present and price action is looking very dicey

Chris Weston

Pepperstone

Chinese markets are in freefall at present and price action is looking very dicey. The China A50 cash is the top 50 mainland Chinese stocks, however the futures market settles on the Singapore exchange. Given non-residents (of China) cannot trade the CSI 300 and Shanghai Composite due to its closed capital accounts, this index is the best and cleanest way to get direct exposure to China. The 30-day correlation between the A50 cash and the Shanghai Composite is currently at 90%, so while many will look to hedge China concerns using the AUD, this is in fact a very poor hedge (given the very low correlation) and thus I would always look at trading the A50 cash index. Valuations on this market have never been cheaper, and globally looks like one of the cheapest market, however sentiment is the driver right now .


Chris Weston
Head of Research
Pepperstone

Highly accomplished financial markets professional, with experience at a number of top-tier global institutions on both the buy and sell-side. A natural communicator with a strong ability to analyse macro-economic trends, capital flows and market...

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