21 March 2016
Posted in
Special research
Investors reassess their bearish position on the Chinese equity market. The medium-term expectations have been on the rise since the beginning of 2016. The sentix indicator hints to rising markets ahead.
The latest sentix Strategic Bias for Chinese equities has climbed by 8 percent in comparison to previous week. The indicator hits the zero-line, for the first time since January, which is noteworthy considering the ongoing bear market. The sentix indicator measures investors’ medium term market confidence for a six-month horizon and indicates the general willingness to buy or sell a security. As the latest rise in investors’ willingness to buy improves, it expresses growing confidence, thus, promotes the accumulation of long positions. Subsequent buy orders propel equity prices.
Furthermore, time series analysis underpins that comparably dynamic increases of the sentix Strategic Bias for Chinese equities yielded CSI 300 stock index returns of on average 4.3 percentage points within the subsequent 16 weeks. Hence, the likelihood of a retest of the June 2015 down trend at the 3350 level is high. Should the index even break its downward trend, the market has potential for more gains.
The sentix Strategic Bias (investors’ six-month market confidence) is polled on a weekly basis since 2001 as part of the sentix Global Investor Survey. It reflects the strategic view of market participants as well as their basic convictions and perceptions of value for a given market. As this indicator represents investors’ general willingness to buy or sell it should not be interpreted as a contrarian signal. Rather it is usually leading the market by several weeks.
The current sentix Global Investor Survey was conducted from 16-Mar 16 to 19-Mar 16. 1079 individual and institutional investors took part in it.