Week Ahead: The New ABC stands for "All-in Buy China"?

Week Ahead, 30 Sept 2024

A month ago, the acronym ABC stood for "All But China." A month later, it became "All-in Buy China." The China A50 Index surged 22% for the week, and the Hang Seng Index (HSI) outperformed the S&P 500 year-to-date. These gains followed Beijing's announcement of forceful policies to stimulate economic growth ahead of China's Golden Week holiday.

Using the China A50 Index, Our Cycle Indicator for China markets, has turned positive (bullish). Therefore, investors might consider allocating funds to ETFs such as MCHI (US-listed), 2800 or 2822 (HKEX-listed), or HST or YYY (SGX-listed), which track the broader Greater China markets.

Psychologically, the current price level might seem "too high" for some investors. One strategy is to start with 25% of the intended allocation and gradually increase it over time or apply Dollar Cost Averaging (DCA).

However, it's important to remain cautious. Markets will continue to monitor the Chinese government's commitment to economic growth. Any setbacks could lead to a market pullback.

The S&P 500 (SPX) rose this week, closing at 5,738.16. While we have a technical target of 5,885, we're cautious about the week ahead for SPX as the third quarter of 2024 ends and companies report their earnings.

Japan's Nikkei 225 futures fell 4.55% on Friday following a change in leadership. Markets may be concerned about uncertainty surrounding the new government's interest rate and currency policies. The hawkish rate hike in August caused the Nikkei to plummet 26%, dragging down global markets. Therefore, we're monitoring this situation closely.

Headlines for the week:

- US Aug Jobs Report, FOMC Chair Powell to speak

- China Golden Week Holiday

- SG Aug PMI

Disclaimers apply

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