Author: Sandeeep N

The CSI 300 rose 2.1% for the first three trading sessions this week and remains in a Confirmed Uptrend with two distribution days. Support is at the lower edge of the previous gap (~3,627, -4.3%), followed by March’s low (~3,503, -7.6%). Resistance is at the 200-DMA (~3,900, +2.8%). Global stocks gained on hopes the pandemic is peaking, boosting risk appetite in the domestic market. But as damage to economy remains highly uncertain, we advise staying patient. The consistent low trading volume confirms our cautiousness. As we expect the CSI 300 to consolidate sideways at 3,627–3,900 in the near term, we recommend a selective approach, focusing on stocks that have broken out of solid bases or bounced off key support with volume. In addition, as the market enters Q1 2020 earnings season, companies’ performance will become the focus. Pay attention to names with robust Q1 earnings growth (guidance) or that are expected to recover soon.

The CSI 300 rose 0.09% this week on lower volume and remains in a Confirmed Uptrend with two distribution days. For the first quarter of 2020, China’s A share market outperformed the global market, with the tech-heavy ChiNext index gaining 4.1%. While most countries’ markets suffered heavy losses, China’s major indices were trading constructively with resilience. Among stocks with top liquidity (ADV >$30M), 63% were trading above their 200-DMA. Despite the uptrend, we remain cautious. Trading volume was low and the CSI 300 and Shanghai Composite Index are still below their 200-DMA. The market is expecting more policy stimulus, and U.S. recession fears could also impact domestic sentiment. Investors are advised to focus on sectors with low overseas exposure (such as Consumer Staple, Retail, Building Materials, and Agriculture). We advise remaining patient and maintaining a defensive approach. The CSI 300 is expected to consolidate as it approaches resistance at its 200-DMA at ~3,900 (+5.0%). The next support lies at the previous low of ~3,503 (-5.7%).