chinese equities are once again adrift after a frenzied rally in stateowned firms leaving traders searching for catalysts to drive the next leg of gains the benchmark csi 300 index has erased a jump fueled by a rise in statelinked and artificial intelligence stocks as focus reverts to china’s lackluster economy as a result turnover in the mainland market has dipped below a key mark while volumes in hong kong are also shrinking the change in sentiment suggests that traders remain wary about chinese stocks even as authorities pledge to improve statelinked firms’ valuations and vow to allow them to tap more capital beijing’s strained ties with washington and the risk of sudden policy changes are among the longstanding worries here are four charts to illustrate the waning momentum in chinese shares onshore investors tend to take their cue from their offshore peers and recent flows have provided little inspiration foreign funds’ daily net flows via the trading links have dipped below 10 billion yuan 14 billion since midfebruary and are less than half of that on most days this comes after purchases reached a record 1412 billion yuan in january to surpass inflows for all of 2022 the fragile sentiment is also reflected in the techheavy chinext index which has fallen about 20 from a peak reached last july only a quarter of all the shares on the gauge are trading above their 200day moving average indicating a widespread lack of enthusiasm that’s a far cry from mid2020 when the index was a hot trade thanks to bets on solar and electronic vehicle stocks such as contemporary amperex technology co and sungrow power supply co a weekly reading of the shanghai composite index’s moving average convergencedivergence is emitting bearish signals the indicator is forming a socalled negative crossover which suggests that sellers are back in control similar to an episode in midseptember last year which preceded a bout of losses to be sure technical indicators suggest that the downside in chinese equities may be limited the csi 300 index is likely to find support at the 618 fibonacci retracement of its reopening rally this support has remained intact even after being tested multiple times in recent months indicating that buyers are ready to dive in whenever there’s a dip with assistance by john liu april ma and mengchen lu