Shanghai composite recovers from three month lows, trades above 4100

FXStreet (Mumbai) – The Chinese stock markets recovered from the three month lows to trade above 4100 levels on reports of IPO suspension and further liquidity operation.

Shanghai Composite erased 5% drop

The index was down 5% below 3,850, but recovered the entire losses to hit an intraday high of 4195.73. The index currently trades at 4135.71; up 2.04%.

The recovery was triggered on reports that PBoC has injected another CNY50B in liquidity through 7-day reverse repo and also lowered the offering yield by 20bps to 2.5%. Chinese press was also reporting that regulators are considering allowing the country’s pension fund to invest in A-share market.

Shanghai Exchange also announced a halt in margin trading for select stocks. The rout in the equity markets has been largely blamed on an out-of-control margin trading.

Shanghai Composite Technical Levels

The immediate resistance is seen at 4200, above which the index could target 4264.77 (June 23 low). On the other hand, a break below 4099.04 (May 8 low), under which the index could drop to 4000.

The Chinese stock markets recovered from the three month lows to trade above 4100 levels on reports of IPO suspension and further liquidity operation.

(Market News Provided by FXstreet)