China had its best day in years last night.
The Shanghai Composite was up over 4%.
Matthew Holland of Morgan Stanley has some thoughts…
China loves a Friday. Looking at the mail I wrote last Friday “I have to go back a long way to find the last time I wrote that China ends the week as the best performing market in the region” suddenly its getting like buses, you wait for ages then 2 come along at once. The days starts innocuously enough but all it took was the HSBC Flash PMI to light the fuse that sparked the market into life as we see a spectacular 4.3% gain its best 1 day performance for 2012. More impressive was the surge of volume that accompanied the move with more than $33bn, second highest of the year, more than double the recent average as retail returns to the market. As ever in Asia momentum a powerful force as few wanted to buy the dip but now there are plenty that want to chase the rally with the SHCOMP now having put on 10% since the lows 10 days ago now, A shares only -2% for the year. You often hear the comment that “I’m happy to miss the 1st 10%” and that’s exactly what many have done as this years ugly duckling shows signs of becoming a swan. Record volume on the XUA futures contract with the open interest now exceeding $2bn for the first time as the lack of QFII send accounts looking for other ways to get long the mainland.