Chart Book

Chart of the day: Worrying signs in China’s big-caps

PUBLISHED : Monday, 22 January, 2018, 11:59pm
UPDATED : Monday, 22 January, 2018, 11:59pm

Signs are showing that investors are getting increasingly wary of the rapid gains in China’s big-cap shares. The volatility index linked to the 50 biggest companies on the Shanghai exchange rose to a record high in the week to January 19 before dropping slightly on January 22. The last time when the gauge set a record in November, the SSE 50 Index fell as much as 7 per cent in the following three weeks. So far this year, the SSE 50 Index has jumped 9.4 per cent, taking its 14-day relative strength index to 80.9. Readings above 70 are seen as a signal that stocks are overbought. Still, Haitong Securities says financial stocks are likely to lead the gains in big-caps this year as earnings pick up, valuations recover and institutional investors have the flexibility to raise weightings in the sector.