Possible Liquidity Injection Not Lifting China Equities ... Yet
Overnight the China Securities Journal reported that China might introduce more proactive policies to ensure stable economic growth. Ironicall, such commentary elicits more of a reaction from the U.S. equity markets than it does from the Shanghai Composite. In our comparison of the daily charts of the Shanghai Composite and the S&P 500, we notice that the Chinese market not only remains in the grasp of a powerful bear market, but its near-term action hardly suggests the anticipation of a meaningful liquidity injection. In fact, the Shanghai Comp has just violated important support, and is vulnerable to downside continuation that tests its January lows. If China is about to provide a large dose of stimulus, or otherwise inject liquidity into its economy and markets, well, the Shanghai Composite is in disbelief for the time being.