China is the second largest economy in the world after the United States. Its stock market has continued to improve in the past few years with many companies being listed there. The China A50 index was created by FTSE. It is an important index because it highlights the performance of the biggest Chinese companies.
Some of the biggest companies in the index are the Agricultural Bank of China which has more than 360 million retail clients. Others are Bank of China, Bank of Beijing, and China Life Insurance.
This year, the index has performed poorly because of the ongoing disruption brought about by the issue of trade. In fact, in the index, only five companies have had positive returns YTD. These are Petrochina, Bank of Shanghai, Jiangsu medicine, China Petroleum and Chemical, and China Merchants Bank. The biggest gainer has grown by just 10 percent.
In contrast, the US stock market has continued to boom during the entire period of the trade war. The S&P and the Dow have gained by 2%. Before the recent rout, the two had gained by more than 8%.
In the past few weeks, the China A50 index has been trading in a horizontal channel, establishing near-perfect support and resistant points as shown below. What this means was that the moment it hit the support of 10755, it moved automatically to the resistance level of 12000. Today, the CNX/USD pair has reached at 10995, which is closer to the support. This means that while the pair will potentially continue moving lower, it may find an important support at the 10755 level. It will potentially continue moving up from there.