China 🇨🇳 strengthens stock market trading - Good or Bad News?

Another big news for China market, again and again after every rally. [Surprised]  [Surprised]  [Surprised]  China's Cabinet vowed to tighten stock listing criteria and urged companies to improve corporate governance in new guidelines released on Friday, the latest effort to support the nation's equity market. 

According to the statement, the State Council will ensure“high quality development”of listed companies, crack down on illegal share sales and strengthen the supervision of dividend payouts. It will also promote the entry of medium- to long-term funds into the market.

The measures come as the equity market has struggled to extend a nascent rebound, with the CSI 300 Index falling for the seventh session on Friday.

Personally, I think such measure will continue to pressure the Chinese stocks but this measure might be positive for long term horizon. For such, I am generally bearish for Chinese stocks in short term. 

The leader $Alibaba(BABA)$  broke down its uptrend line for the first time since 2024. I believe the stock will be bearish next week and continue to plunge towards 66 USD support area.

BABA daily chart

Similar to BABA and all other Chinese stocks, $Bilibili Inc.(BILI)$  gapped down on Friday with volume. Chart wise, the stock still in an uptrend but due to the recent China market trading regulation, I am more pessimistic for the stock price in short term.

BILI daily chart

A disappointed case for PDD, despite a great earnings, the stock gapped up and pulled back continuously after the earnings. It reaches EMA200 support now. If we ignore all the bad news and noises in the market, and purely focus on technical trading, I am $Pinduoduo Inc.(PDD)$  for PDD as I believe EMA200 will act as a strong support which attracts buyers in at this level. However, if the overall Chinese market remains weak, this support shouldn't be able to hold long, and the stock will continue to plunge.

PDD daily chart

Basically, similar analysis to other hot Chinese stocks like $JD.com(JD)$  $iQiyi Inc.(IQ)$ , all of them gapped down on Friday and will generally move the similar way next week. Attached their chart below for your reference.

JD daily chart

OQ daily chart

In conclusion, China has issued an unprecedented set of policy guidelines to push for transparency, security, risk-management and vibrancy in the country's US$9 trillion stock market, sketching out a view of what the world's second-largest capital market could look like by the middle of the century as Beijing solidifies its goal of becoming a financial superpower. 

How do you interpret this policy? Do you support or against it? Are you still holding Chinese stocks? 

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