BMO China Equity Index ETF (ZCH.TO) & SIA Greater China Matrix
It was an intriguing week in the market, highlighted by a somewhat surprising stimulus package from China that positively impacted global markets, including commodity prices. Since last week, the China Mainland ETF (FLCH) rose by 11.53%, while the China Hong Kong ETF (FLHK) increased by 7.41% and Taiwan’s ETF (FLTW) gained 5.79%. Many other ETFs also saw significant gains. On a sector level, the market showed mixed results. Materials rose by 2.49% and Utilities by 1.90%, partly due to the Microsoft/Constellation Energy announcement regarding their nuclear ambitions. Conversely, several sectors experienced minor losses, including Consumer Staples, Energy, and Financials, which fell by less than 1%. Health Care had the largest decline at -2.38%. In the currency market, digital currencies saw substantial increases, with Bitcoin gaining 5.02% and Ether rising by 10.92%. Most currencies rallied against the US Dollar, except for the Japanese Yen, which fell by 2.53%. In commodities, Copper rose by 4.43%, Silver followed closely with a 4.34% increase, and Gold was up another 3.31%.
BMO China Equity Index ETF (ZCH.TO)
Returning to the situation in China, we will examine some key charts from a SIA custom universe/matrix as we analyze this developing story. The BMO China Equity Index ETF ranks highly in the SIA Custom Matrix. While it may get lost among over 700 names in the All CAD ETF Report, it stands out in this peer group, currently positioned at #14, up 14 spots this month.In today's DSR, we highlighted shares of Tencent Music Entertainment, which share a similar trajectory. The BMO ETF effectively illustrates both the trend reversal and the overhead resistance even a little better. Overall, the news is mixed given the resistance overhead; but it appears that China equities are gaining traction, and it remains an evolving story.For shares of ZCH.TO, there is solid support at $13.01, with another potential support level at $13.67. Resistance is marked with a pink oval, with more significant levels at $17.36 and $18.06. While shares of ZCH.TO are now in the favored zone of our custom universe, they rank lower in other SIA Reports.
SIA Greater China Custom Matrix Review
We take pride in the universe we’ve developed for China-focused investments. We have added numerous China-specific ETFs from various fund companies, along with US and Canada-based mutual funds targeting China. Additionally, we’ve included prominent stocks such as Taiwan Semiconductor (TSM), Tencent Holdings (TCEHY), and Alibaba (BABA). Notably, GDS, one of our SIA Model holdings, ranked #1 in this custom list.Finally, we incorporated the S&P 500, TSX Composite, and NASDAQ Index as benchmarks to assess relative performance, with the line of demarcation starting at the #17 position, just below the favored zone. In other words, stocks ranked above #17 are outperforming the S&P 500 broad index. While we won’t list all highlighted names, we encourage you to check the positions marked in yellow and begin compiling your shopping list for when this market starts to gain momentum.
Should you wish to discuss this matrix further, please reach out to your SIACharts representatives.
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