Spring Rally in Chinese Equities Signals Potential Lift for AUS and NZD

Amidst a gloomy global trade outlook, China's equity markets are flashing green, potentially offering support to the Chinese Yuan (CNY) and its liquid proxies, the Australian Dollar (AUD) and New Zealand Dollar (NZD).

The “Spring Offensive”

The Shanghai Composite Index has recorded a seven-day winning streak, closing near 3960 points, driven by expectations of significant fiscal stimulus in 2026—the opening year of China's “15th Five-Year Plan.”

• Volume Surge: Total transaction volume for the year has breached 407 trillion yuan, a historic high, indicating robust retail and institutional participation.
• Sector Rotation: Capital is flowing into commercial aerospace, robotics, and high-beta technology sectors, signaling increased risk appetite.

Currency Implications

This “risk-on” sentiment in Chinese assets is providing a floor for the CNY, despite the strong US Dollar.

• AUD/USD Correlation: As China is Australia's largest trading partner, the stabilization in Chinese equities often precedes strength in the Aussie Dollar. Traders should monitor if the Shanghai rally can detach AUD/USD from its recent bearish trend.
• Capital Flows: Analysts at China Merchants Securities note increasing net inflows into broad-based ETFs, suggesting that foreign capital may be positioning for a valuation recovery in 2026, betting on domestic demand over export reliance.

While structural issues remain in the Chinese property sector, the short-term liquidity injection and “Spring Festival” pre-positioning create a tactical bullish window for Asian currencies against the Euro and Yen.