Chart of the Week - Becoming Investable
They said it wasn't investable, now it's up over 50% --and has just broken through a key threshold and there's reason to expect further upside...
First they said it was uninvestable.
Then it broke out —but they said it was still in a downtrend.
Now it’s broken that downtrend line.
And there are still several reasons to expect further upside.
Here’s why I’m bullish on Chinese stocks:
Strong Technicals: as alluded to, we’ve seen 3 key breakouts (through the 200-day average, through long-term overhead resistance, and through the down trendline joining the last two major peaks).
Stock/Bond Ratio: we’ve also seen a key breakout in an indicator almost no-one else watches; the Chinese stock/bond ratio (important risk-on signal).
Cheap Valuations: Chinese stocks are reasonable vs history, cheap vs peers, and cheap vs bonds (very high equity risk premium).
Macro Tailwinds: we’ve seen a steady drift lower in interest rates, incremental stimulus measures, and now a tentative upturn in the PMIs from quasi-recessionary levels.
Sentiment: we’re seeing strong retail participation (likely an element of rotation out of languishing property and overheated gold, into stocks), earnings revisions momentum indicators are surging from previous pessimism, and there’s still an air of skepticism among global investors.
So it’s a case of good price and flows momentum, scope for upside in valuations, macro updrafts, and a steady changing of minds as price moves sentiment.
All this adds up to a bullish picture with room to run. It’s also entirely consistent with the bullish outlook for commodities and emerging markets.
Key point: There’s room to run in China A-Shares’ triple-breakout.
Further Macro-Market Insights (free to access)
Here’s a few recent charts from my “Off-Topic ChartStorm“ series, be sure to check out the original posts for full context and conclusions.
Bullish Commodities Outlook
There’s growing evidence for a new cyclical bull market in commodities (following a cyclical bear market from 2022-24). This is likely to become a major macro theme in 2026 (not to mention a very interesting opportunity for investment in both commodity related stocks + commodity prices themselves). [Full Story + Charts]
Bullish on Emerging Market Equities
There’s also a growing body of evidence to suggest that we are going through a major bullish inflection point for emerging market equities. Looking at technical developments, macro-fundamentals, behavioral aspects, and other factors — there’s a lot that could go right for EM Equities. [Full Story + Charts]
Calm Before the storm in Fixed Income
There’s a growing set of risks (and opportunities) in fixed income markets. From the paradigm shift in Japan, higher for longer risk in the USA, and changing market structure, to collapsing volatility and tight spreads, there’s several key charts and takeaways investors need to consider here. [Full Story + Charts]
Topics covered in our latest Weekly Insights Report
Aside from the chart above, we looked at several other charts, and dug into some intriguing global macro & asset allocation issues in our latest entry-level service weekly report:
Global Markets Update: global equities, fixed income, FX commodities
European Equities: update on sentiment and technicals
US Dollar Outlook: outlining the bear (vs bull) case
Emerging Markets: a comprehensive look at the key charts, indicators
China: key charts and indicators for Chinese stocks
Commodities: clear view on the bullish outlook
Commodity Equities: bullish on the basket
Subscribe now to get instant access to the report so you can check out the details around these themes + gain access to the full archive of reports + flow of ideas.
For more details on the service check out the following resources:
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But if you have any other questions definitely get in touch.
Thanks for your interest. Feedback and thoughts welcome.
Sincerely,
Callum Thomas
Head of Research and Founder at Topdown Charts
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