The Chinese central bank unrolled the most significant stimulus program since the COVID-19 pandemic and Chinese equities are starting to show signs that the long history of underperformance relative to western equities could possibly be on borrowed time. The name that has already demonstrated leadership that we want to focus on should this move into Chinese names continues is Tencent Holdings (TCEHY) . Before we get further into the company specifics it's important to reiterate that Chinese equities have under-performed U.
S. equities since 2007. The People's Bank of China (PBOC) unveiled a multiple trillion USD package to boost the sagging economy that has been mired with deflation, a sagging housing market, and a slowing economy.
The goal of the program according to Chinese officials is to return the economy to a 5% growth rate. Looking at the weekly chart of the iShares China Large-Cap ETF (FXI) we can see the breakout from the blue dotted trendline on above average volume and a turn higher in the S & P 500/FXI ratio (bottom panel). The price of FXI is moving higher, but does face a challenge of resistance from the 200-week moving average as well as the 50% retracement.
If this move is sustainable FIX should be able to continue through that $34-area resistance zone. Turning to the focus company Tencent Holdings (TCHEY) is a multinational technology conglomerate listed on the Hong Kong exchange since 2004. The company is most known for (according to Tencent.
com) "some of the.