EBC Markets Briefing | Chinese stocks anemic with dry power on sidelines

The FTSE China A50 Index is down sharply on Wednesday, hitting a fresh 52-week low. The drop erases the strong momentum gained earlier from domestic retail inflows and policy support.

State-backed funds in China appear to be stepping up their market interventions. Inflows of the National Team into a basket of ETFs last week surged to the highest since July, according to data compiled by Bloomberg.

Chinese tech firms have borne the brunt of the recent downturn in the global AI stock rally, creating a significant hurdle for Beijing's strategy of leveraging capital markets to achieve technological dominance.

Beijing has also greenlit 18 actively managed ETFs in a move that could inject tens of billions of yuan into the mainland A-share market to shore up investor sentiment and curb market volatility.

The PBOC announced it would study switching its primary policy benchmark from the seven-day reverse repurchase rate to the overnight reverse repo rate, which functions as a liquidity easing vehicle.

The country's 10-year government bond yield is hovering near historically low levels. Despite lower net interest margins, local investors take shelter in the high-yield bank stocks.

EBC Financial Group analyst says he FTSE China A50 highlights a mature downtrend culminating in an accelerated slide. But a short-lived bounce cannot be ruled out given persistently oversold RSI.

Asset Recap

As of market close on 20 October, among EBC major products, Equifax shares led gains after the company reported a 10% increase in Q3 revenue, fuelled by strong growth across its core business segments.

Tower Semiconductor experienced a notable sharp decline, driven primarily by widespread profit-taking across the semiconductor sector and valuation resetting.

The Dow led Wall Street higher as investors focused on value stocks, while technology lagged. Financial stocks advanced amid signs of Treasury yields stabilisation.

A portfolio diagnostic is critical to managing tail risk. EBC Turbo leverages a proprietary scoring model to run a six-dimensional analytics scan within 5 seconds, mapping your risk-return dynamics and decoding your trading DNA.

EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.