Trading on the China A50
Just a few years ago, the Asian stock markets didn’t really interest traders and only a few experienced investors accepted the challenge of speculating on this type of highly controlled market. But times have changed and the Asian markets, due to the emergence of certain countries on the economic level, have rapidly claimed their place in the stock market sector.
This of course concerns share trading of these Asian countries, but also the stock market indices issued in this part of the world. Here we shall look at the Chinese market, more particularly the China A50 index, one of the China indices group.
Presentation and characteristics of the China A50:
Firstly, and particularly before looking closely at the China A50, we should explain that this index is part of a group of Chinese indices, specially created to enable stock market investment. This group is called the ‘FTSE China Index Series’ and comprises a complete range of indices, categorised either according to the number of businesses represented or according to a particular sector of activity. Please note also that the indices of this series include both shares and bonds.
The ‘A’ that appears in the name of this index means that it only takes into account ‘A’ type shares from the 50 largest Chinese companies.
It is important to note that although this group of indices enables an overall evaluation of the Chinese market, only the China A50 and China 25 indices are accessible for trading on an international level as they are the only ones quoted continuously on other exchanges.
The companies quoted on the China A50:
As explained above, the China A50 index is a Chinese index quoted in real time which is traded on the major European stock exchanges. As indicated by its name, it represents the tradable assets of the fifty largest, most influential companies quoted on the stock markets in China. To compose this index, the responsible authorities basically take into account the total stock market capitalisation of each of the companies and their market liquidity. However, the companies are also chosen according to their representation of the Chinese economy.
It should also be noted that the shares included in the China A50 are also quoted on the Shanghai and Shenzhen stock exchanges which are two of the major Chinese stock exchanges.
Historical rates of the China A50:
The Chinese index, China A50, can be profitable for trading as it is always affected by highly pronounced trends, over the short and long term, which makes it an ideal asset for traders that use technical analysis.
In a general manner, we can observe a net rise of this index from 2007 for several years before dropping in 2010 in a trend that continues even now.
Trading in the China A50 using CFDs:
Although the CFDs enable you to trade easily on the China A50 index, over the short and long term, the elements that will assist you in anticipating the rates are as follows:
- The historical and technical analyses of the prices are major indicators.
- The trade balance of China, a major exporter, is also an influential factor.
- The global economic health plays a primordial role in the Chinese economy.
- The value of the Yen, which facilitates or complicates Chinese exports.
- The economic health of the major Chinese activity sectors.