Key Points:
- The China50 index jumped 3.87%, closing at 13,738, with a session high matching the close.
- Global traders increased exposure to Chinese equities amid growing economic optimism and capital rotation.
- Hedge funds betting on China outperformed as Wall Street volatility spurred capital inflows into Asian markets.
China50 Index Rallies as Traders Rotate Capital into Chinese Markets
Chinese equities surged on Thursday, with the China50 index climbing 3.87% to close at 13,738, marking a sharp reversal from earlier consolidation. The index opened at 13,226 and remained range-bound before breaking out in late-session trading.
The rally was driven by a strong influx of hedge fund capital as global traders sought alternatives to volatile U.S. markets. Chinese stocks outperformed globally, with investors increasing exposure amid expectations of monetary easing and fiscal stimulus from Beijing.
The latest breakout above 13,700 suggests renewed bullish momentum in China’s equity market, following a prolonged period of underperformance. The MACD indicator shows strong bullish momentum, while moving averages indicate a solid uptrend.
Hedge Funds Rotate Capital into Asia as U.S. Volatility Rises
Asia-focused hedge funds outperformed global peers, with Chinese stocks leading gains. The firm estimates that hedge fund purchases of Chinese equities have nearly doubled compared to the September 2024 rally.
This capital shift was largely triggered by U.S. market uncertainty, as Wall Street stocks faced heavy selling pressure amid concerns over aggressive tariff policies and recession risks.
In contrast, Chinese equities benefited from improving sentiment, expectations of economic stimulus, and foreign capital inflows. The Hang Seng Index and other major Chinese benchmarks recorded strong gains, reinforcing confidence in the region’s resilience.
Technical Analysis
The China50 index surged by 3.87%, closing at 13,738, with a sharp breakout from the 13,186 support level. The price action shows a strong bullish rally, with the MACD confirming upward momentum and the moving averages (5,10,30) trending sharply higher, indicating strong buying interest. The index’s parabolic rise suggests a potential overbought condition, but momentum remains intact.
Picture: China50 soars past 13,700 as bulls drive a breakout rally, as seen on the VT Markets app
If the bullish sentiment continues, the next key resistance lies near 13,800-14,000. However, traders should watch for a possible retracement if profit-taking emerges. A drop below 13,600 could signal a temporary pullback toward 13,400-13,300. Investors should monitor Chinese economic data, policy announcements, and global risk sentiment, which could impact further price movements.
With the China50 index reaching its highest level in months, traders are watching for continued policy support from Beijing.
For now, China remains a focal point for traders seeking stability amid global market fluctuations, with the recent breakout signaling strong upside potential.
