What a difference a long weekend can make. China’s new year holiday last month proved a turning point for asset prices, from oil to stocks. So what might the more global Easter break do for sentiment?
Investors can only hope. Since mid-February, charts have mostly pointed upwards but the mood has been not so much conviction, or even relief, as a vague feeling that what went down will probably go up. Strategists at Société Générale have termed it “risk-uncomfortably-on.”
Nowhere is that clearer than in investor attitudes to Chinese equities. Take the Hong Kong-listed Chinese stocks of the Hang Seng China Enterprises Index. Compare the 10 worst performers before February 11 — its nadir — with the 10 best performers since, and many names appear on both lists. That suggests traders covering their earlier short selling positions more than any willingness to bet on outperformance by specific companies, or sectors.