The behaviour is in contradiction to the somewhat disappointed Western reaction to the policy changes. The West, as usual, expected a bazooka-style collection of policy announcements that would explode the economy, preferably in their preferred direction.
On Oct 1, the skies over Beijing were enlivened with fireworks in celebration of the country’s 75th National Day. This came a few days after the China market put on its own fireworks display, rocketing by more than 10% in response to a range of government initiatives.
The sharp and fast rally looks impressive on the chart, particularly compared to the relentless months of downtrend activity earlier that dragged the Shanghai index to new lows around 2,700. The recovery rally rocketed past resistance levels at 2,900 and 3,050 and paused near 3,080. The upside target is around the previous highs at 3,170.
