Both the CSI 300 and Shanghai Composite fell 1.3% today, making it consecutive weekly losses for China’s major indexes. Today’s decline erases the gains from the beginning of the week and pours cold water on any hope of a recovery in sentiment for the beginning of the new year:
Daily chart of the CSI 300 index
The bounce earlier this week came after a test of the 100-day moving average (red line). But with today’s decline, we see sellers removing a key technical level. And that could point to more danger for Chinese stocks next week.
This is especially so when a weaker yuan is also at play, making it less attractive to hold Chinese assets. Not a good start to the year to say the least.