Both the CSI 300 and Shanghai Composite indices closed down by 1.3% today and that makes it back-to-back weekly losses for major indices in China. The drop today erases the gains from earlier in the week and pours cold water on any hopes of a recovery in sentiment to start the new year:
CSI 300 index daily chart
The bounce earlier this week came after a test of the 100-day moving average (red line). But with the drop today, we're seeing sellers take out the key technical level. And that could spell out more danger for Chinese equities going into next week.
That especially with a weaker yuan also in play, making it less enticing to keep a hold of Chinese assets. Not a good start to the year to say the least.