Chart of The Day – CH50cash

Following a mixed first quarter of 2026, the China FTSE 50 index is steadily recovering its losses. The CH50cash contract has broken above the 15,000-point mark and is currently trading at its highest levels since January, gaining nearly 2% today. The rally is driven by an improving sentiment on Wall Street and across Asia, fueled by hopes for peace talks between the U.S. and Iran. China has a significant stake in resolving this conflict, as it is not only the largest importer of Iranian oil but also sources up to 50% of its fuel from the Persian Gulf region.

It is also worth noting that China’s top 50 blue-chip index underwent a rebalancing last month. Following the March update, the portfolio has shifted heavily toward technology and industry at the expense of traditional banks.

Key Index Components:

• Kweichow Moutai (9.41%): Consumer sector leader and a bellwether for domestic demand.
• CATL (8.73%): Global EV battery titan; a primary beneficiary of the energy transition.
• China Merchants Bank (4.17%): The largest commercial bank in the basket and a leader in modern financial services.
• Zijin Mining Group (3.48%): Mining giant benefiting from surging demand for copper and gold.
• Zhongji Innolight (3.44%): Tech firm providing infrastructure solutions for AI and data centers.
• China Yangtze Power (3.35%): Defensive leader in the utilities sector.
• Ping An Insurance (3.16%): Leading insurer undergoing a major digital restructuring.
• Foxconn Industrial Internet (3.08%): A key player in the tech sector, deeply integrated into global supply chains.

Recent Changes: New additions to the index include China CSSC Holdings (shipbuilding), Suzhou TFC Optical (optics/AI), and Wanhua Chemical (specialty chemicals). Deletions included China Everbright Bank and CRRC.

Fundamentals: PBOC Policy and Valuation Discounts

The rally is supported by the People’s Bank of China’s (PBOC) accommodative stance. Governor Pan Gongsheng has signaled a readiness for further interest rate cuts and Reserve Requirement Ratio (RRR) reductions to maintain liquidity. Simultaneously, to curb excessive speculation, exchanges have raised margin requirements to 100%, promoting stable growth driven by equity capital.

Analysts from major U.S. institutions (Goldman Sachs, Bernstein) point to highly attractive valuations: the Forward P/E ratio is comfortably below 15, with some levels recently dipping below 10. A double-digit EPS growth is anticipated for 2026.

Technical Analysis: Key Levels

The CH50cash contract is currently in an uptrend and is potentially testing the neckline of a double bottom formation. The projected target of this pattern points toward levels near 16,000 points. However, the local peaks from January near 15,700 points represent immediate resistance.

• Support Levels: 14,800 and 14,950 points.
• Positioning: Current futures market data suggests a predominance of long positions among speculators. Furthermore, there is a significant surge in interest in ETFs tracking major Chinese indices, including the China 50.

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