The Chinese financial market is starting to recover in this new year 2012. Following a disastrous 2011 when the valuation of Chinese stocks has almost been divided by three, investors have found the way of optimism.

Indeed, operators seem want to put aside fears of a slowdown in the global economy and recession in Europe in favor of economic indicators and forecasts which are much more favorable.
The World Bank expects that the Chinese economy will achieve growth of 8.4% in 2012 while inflation will remain controlled. Meanwhile, recent indicators published during the month of january were reassuring, China seems to be away from a hard landing. Indeed, the PMI Manufacturing has exceeded the consensus (50.5 against 49.5 expected) and the major component of new orders recorded a high of three months of 50.4 against 49.8 in December. Similarly, although declining, the service industry continued to grow at a moderate pace, the services PMI standing at 52.5.

Technically, the dynamics on the Shanghai Composite Index remains bullish on daily data over the 2250 points threshold coinciding with the 20-days moving average. In weekly, the index approaches the upper limit of its downtrend channel launched in April 2011 located around 2350/2400 points. Crossing up all of this downtrend channel medium term (Weekly closing> 2420) could cause an acceleration upward progressive course towards the weekly 50 moving average at 2600 points then to 3000 points.