China’s key share index was moving toward a support test after global weakness dragged stocks lower.
CHINA 50 – Daily Chart
The CHINA 50 index has gains fade on Tuesday, and the next target is the 14,761 level that provided support in October and November.
The Chinese share market was also weighed down by threats of deeper regulatory scrutiny. The country’s securities regulator vowed to step up monitoring and clamp down on excessive speculation. The news came when stocks were near a decade high, with record volumes. Exchanges said they would raise the minimum margin requirement to 100% from 80%, effective January 19.
Onshore share turnover was near 4 trillion yuan last Wednesday, the highest on record, surpassing the previous record of 3.48 trillion yuan set in October 2024. The surge created worry among regulators due to past market excesses, such as in 2015, a CNBC report said.
“Regulatory tightening took place as our sentiment indicator surged to an overheated level with record high turnover,” Morgan Stanley analysts wrote. However, they expect added liquidity in A-shares and Hong Kong equities to remain strong in the first quarter.
Foreign investment has continued with net inflows exceeding $50 billion in recent months, according to data. Giant U.S. hedge fund Bridgewater has said it is still bullish on Chinese stocks after a 45% gain in 2025, its best performance in years.
