Index provider MSCI this week finally decided to include the A shares of 222 Chinese companies in its emerging-market basket. Not surprisingly, the China Securities Index of the top 300 A shares on both the Shanghai and Shenzhen stock exchanges rallied – but just a little, mind you, as befits a mature market. It has matched last year’s high of 3,583 points and looks set to continue upwards, though bullish momentum is not as strong as it could be. It is not overbought on the RSI, as has been the case for 24 consecutive months, and observed volatility has been well behaved. Long-term moving averages support this view and our next measured targets are 3,700 points and maybe the 3,800-point resistance level.
