Note that you may be able to trade the Chinese stock market via other platforms.
Chinese Stock Market Updates
China A50 Futures Trading Analysis
The China A50 is currently trading at 8,760.
Overnight, the market closed 95pts (1.09%) higher at 8,800.
30 Minute Chart Analysis
The stock market index is currently below the 20 period MA of 8,774 and below the 50 period MA of 8,782.
1 Day Chart Analysis
The stock market index is trading below the 20 day MA of 8,993 and below the 50 day MA of 9,780.
Update by Gordon Childs, Editor,
[10:24am] Scared Shanghai investors force the index lower
The positive sentiment generated by the Chinese interest rate cut has been short lived as the markets question why Beijing waited and why it didn’t do more.
Having become increasingly used to the more unorthodox methods of the PBoC, it was maybe unrealistic to expect the more commonly used Western tactic of interest rate and reserve rate cuts to have instilled confidence into China’s investment community.
The initial euphoria this triggered with the US markets didn’t even last a full trading session and Europe has once again opened in a sea of red.
The bulls currently are displaying a complete absence of conviction.
However it’s worth remembering that we’re still at the tail end of the summer and equity market volumes still remain particularly thin adding to the market’s ability to exaggerate moves.
Update by Alastair McCaig, Market Analyst,
[9:27am] Volatility is the Name of the Game
Here's how the markets are looking from an Asian perspective.
The volatility could be with us for a month.
Update by Evan Lucas, Market Analyst,
[6:51am] What Impact Has the PBoC Had?
So the Peoples Bank of China has finally acted... but it doesn't seem like much.
Update by Evan Lucas, Market Analyst,
[10:41am] Chinese chaos is contained?
In mid-morning trading the FTSE 100 is back in the black as market confidence returns.
The Chinese stock market may be caught up in its own chaos, but the rest of the global equity markets are recovering.
Traders who are brave enough are picking up cheap stocks, but they’re still fearful we could be in for another sharp decline.
For now the financial instability seems to be contained in China, but that may not last and traders who are buying are keeping an eye on the eject button.
Update by David Madden, Market Analyst,
Stock Market Bubble in China Goes Snap, Crackle and Pop!
The disastrous Chinese manufacturing data released on Friday that caused Shanghai markets to fall off a cliff seemed as good a reason as any for Chinese authorities to act with additional stimulus. Apparently not.
The lack of cut to interest rates or reserve ratios from the PBOC sent Asian markets into a tailspin. The Shanghai composite fell 8.5%, that’s following a 12% decline last week and has now given up all of this year’s gains.
A change in the law announced on Monday to allow Chinese pension funds to invest in stocks may be a long term support for the market but has done nothing to avert short-term panic.
Firstly, pension funds would be insane to invest in Chinese stocks when there are double-digit declines each week.
Secondly, the Chinese stock market is predominantly retail investors who have lost faith in the government’s ability to hold up the share prices and are running scared.
The Chinese government’s intervention into stock markets has proven counter-productive. Forcing institutions to buy and banning them from selling has just added to the panic of retail investors who make up 80% of stock ownership in China.
China in the past eighteen months has been reminiscent of fables told about America during the 1920s before the Great Depression. Stories of taxi drivers and rice paddy farmers investing life savings into a stock market that was up 150% in twelve months was a disaster waiting to happen.
The irony is that the move to weaken China’s currency that precipitated the market rout is probably a positive for the Chinese economy.
The problem is that China’s stock market has long since been divorced from the Chinese economy.
The government blew up the bubble with promises of fiscal and monetary stimulus and by creating the connect scheme with Hong Kong.
However, the real economy is growing at its slowest pace in six years. Now it’s burst it by not making good on its own bloated promises.
There are a multitude of reasons the panic in China is spreading to the rest of the world, but at the heart of it could be that investors are starting to realise central banks are not infallible.
The PBOC has spectacularly failed to stimulate the Chinese economy.
Europe’s whole recovery is based on a lower euro which was just undermined by the yuan devaluation.
The US is experiencing its slowest post-recession recovery on record, despite huge stimulus.
There will more than likely be a short-covering rally in the next few days but for the time being European markets are off the lows but still down on the day and US futures point to a huge drop at the open on Wall Street.
Update by Jasper Lawler, Market Analyst,
[10:33am] China’s Sell-off is Contagious
In mid-morning trading the FTSE 100 is offside as London follows China’s lead lower.
Stock markets around Europe are suffering because the decline overnight in the Far East has spooked dealers in the West.
The great worry is that China will undergo a dramatic drop in the rate of growth, and the knock-on effect to Europe will damage the recovery.
It used to be just Australia that would catch a cold when China sneezed, but the Chinese selloff is far more infectious than initially thought.
We won’t see the impact of the Chinese currency devaluation for a few more months, and when it does trickle down it will be painful.
The PBoC’s decision to intervene in the currency market has done little to restore confidence in the Chinese stock market, and dealers are dreading that more intervention will be required.
The minutes from the Fed showed us that the US was worried about turmoil in the Chinese stock market even before the drop in value of the yuan, and now the outlook is even bleaker.
The dovish tones from the Fed minutes have accelerated the drop in stocks because China is now even more of a concern.
We are expecting the Dow Jones to open 130 points lower, at 17,220.
The US index futures market is extending its losses from last night, and the cautious tones regarding global growth has compounded traders’ fears that China’s economic slowdown could get worse in the short-term.
An interest rate hike in September isn’t off the table, but it is less likely now, and an uncertain macro picture will keep pressure on the US market, even if interest rates stay at record lows next month.
Where Can I Spread Bet on the China Enterprise for Free?
Investing, by its very nature, does involve risks, but if you would like to open a Test Account, where you can trial spread trading on a wide array of markets, then see below for further details.
When considering which trading option might work for you, don't forget that, in the UK, financial spread betting is tax free*, i.e. it is exempt from income tax, stamp duty and capital gains tax.
If you're trying to find a free trading platform, you should keep in mind that you are able to take a position on the China Enterprise without having to pay any commissions or brokers' fees with firms such as:
The spread betting firms listed above provide a Test Account that lets investors test new strategies, study charts and practice with an array of orders, e.g. OCO and GTC orders.
How to Spread Bet on the China Enterprise?
As with a range of financial markets, an investor can place a spread bet on stock market indices, like the China Enterprise, to rise or fall.
Looking at capital spreads, you can see that they are offering the China Enterprise October Futures market at 9623 - 9643. Therefore, an investor could spread bet on the China Enterprise market:
Closing above 9643, or
Closing below 9623
On the settlement date for this 'October' market, 30-Oct-12.
Whilst financial spread trading on the China Enterprise index you trade in £x per point. So, if you choose to have a stake of £4 per point and the China Enterprise moves 24 points then there would be a difference to your P&L of £96. £4 per point x 24 points = £96.
China Enterprise Futures - Stock Market Spread Betting Example
So, if we consider the above spread of 9623 - 9643 and make the assumptions:
You have done your analysis of the markets, and
You think that the China Enterprise index will finish higher than 9643 by 30-Oct-12
Then you may buy at 9643 and risk £2 per point.
Therefore, you win £2 for every point that the China Enterprise index pushes above 9643. Of course, you will make a loss of £2 for every point that the China Enterprise market decreases lower than 9643.
Thinking of this in a slightly different way, if you ‘Buy’ a spread bet then your P&L is worked out by taking the difference between the final price of the market and the price you bought the market at. You then multiply that difference in price by the stake.
Subsequently, if, on the settlement date, the China Enterprise market settled at 9706, then:
Profit = (Closing Level - Opening Level) x stake
Profit = (9706 - 9643) x £2 per point stake
Profit = 63 x £2 per point stake
Profit = £126 profit
Speculating on stock market indices, whether by spread trading or otherwise, is not easy. In this case, you had bet that the Chinese stock market index would increase. Naturally, it can also fall.
If the Chinese stock market had fallen and China Enterprise closed lower at 9588, then this means you would end up making a loss and losing money on this market.
Loss = (Closing Level - Opening Level) x stake
Loss = (9588 - 9643) x £2 per point stake
Loss = -55 x £2 per point stake
Loss = -£110 loss
Note - China Enterprise October Futures spread betting price accurate as of 26-Sep-12.
How to Spread Bet on the China A50?
As with a range of financial markets, an investor can place a spread bet on indices, like the China A50, to rise or fall.
Looking at a financial spread betting site like IGIndex, we can see that they have priced the China A50 October Futures market at 7330.0 - 7370.0. Therefore, an investor could spread trade on the China A50 market:
Settling higher than 7370.0, or
Settling lower than 7330.0
On the closing date for this 'October' market, 30-Oct-12.
Whilst placing a spread bet on the China A50 index you trade in £x per point. So, should you decide to invest £4 per point and the China A50 moves 23 points then that would be a difference to your P&L of £92. £4 per point x 23 points = £92.
Now, if you consider the above spread of 7330.0 - 7370.0 and assume:
You have done your market analysis, and
You feel that the China A50 index will finish higher than 7370.0 by 30-Oct-12
Then you may go long of the market at 7370.0 for a stake of, for example, £2 per point.
So, you make a profit of £2 for every point that the China A50 index moves above 7370.0. Having said that, such a bet also means that you will lose £2 for every point that the China A50 market falls lower than 7370.0.
Put another way, if you buy a spread bet then your profits (or losses) are worked out by taking the difference between the settlement price of the market and the price you bought the market at. You then multiply that price difference by your stake.
Therefore, if, on the settlement date, the China A50 market settled higher at 7465.8, then:
P&L = (Final Level - Initial Level) x stake
P&L = (7465.8 - 7370.0) x £2 per point stake
P&L = 95.8 x £2 per point stake
P&L = £191.60 profit
Speculating on indices, whether by spread trading or otherwise, doesn't always go to plan. With the above, you had bet that the Chinese stock market index would go up. Naturally, the index could decrease.
If the Chinese stock market fell, and the China A50 closed lower at 7281.6, you would end up making a loss on this spread bet.
P&L = (Final Level - Initial Level) x stake
P&L = (7281.6 - 7370.0) x £2 per point stake
P&L = -88.4 x £2 per point stake
P&L = -£176.80 loss
Note - China A50 October Futures spread betting market quoted as of 10-Oct-11.
Where Can I Find Live Spread Betting Prices and Charts for the China Enterprise?
If you would like to access real-time prices and charts for the China Enterprise, you will probably require a spread betting account. Readers should note that opening an account is subject to credit, status and suitability checks.
Should your account application be approved, you can log on and analyse the up-to-the-minute prices/charts. On most platforms, these will be provided as part of the service. So what's the catch? You might get the odd sales letter and/or email from the relevant online spread betting provider.
Of course, if you do spread bet then, before starting, be aware that financial spread trading does carry a high degree of risk and it's possible to lose more than your initial investment.
Although the charting packages differ from provider to provider, to help your trading analysis, the majority of charts come with useful features and tools that include:
An array of time intervals - 2 minutes, 1 hour, 1 day and so on
'Chinese Stock Market Spread Betting Guide' edited by Jacob Wood, updated 05-Feb-16
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