The Chinese bull continues. Below is the chart showing the SHCOMP, CSI 300 and the Chi Next performance YTD. All indices are up, especially noteworthy is the recent melt up in the Chi Next. We have been outlining our long China logic since late autumn, and given the momentum, we suspect the melt up can overshoot.

We have been arguing that the Chinese equity market needs “speculation” in order to properly revive. For long, the margin traders have been decreasing, but this last melt up has brought out the “speculators” once again.

Depending on your view on China, there are relatively cheap ways to play directional moves via the FXI US options. Implied vols have imploded big over past weeks. You just need to decide whether or not the revived Chinese speculator will take this higher, or if he is late to the party.

Source; charts by Bloomberg