China Shanghai Composite Index - Technical Analysis and more

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Just in case someone is actually looking North: Let's look at the Shanghai Composite over recent years.

The 3-year Weekly chart suggests that we may now be at a more significant resistance level. So it will pay to watch out for either a bounce down off a ceiling, or a break and re-test from above.



Now switching to the Daily chart, and since mid-year, China has again been going places. Recently, trading volume has also picked up noticeably:



The usual pullback from Fib Phi and 200% has been preceded each time by a divergent drop of Momentum. Nothing surprising there. Simply watch the rising trend line. If it breaks, we'll have a changed situation.

 

[rimtas]

It is definitely a bullish wave in the early stages. After 5 year decline china is rising its head from the nadir. Expect more good news from this side.

 

[baby_swallow]

Market bubble burst !
In just 7 months the Shanghai index has more than doubled when ordinary
retail traders, Mums & Dads began investing frenzy. Most of them are sharemarket newbies - don't
know what's a market bubble or crash.
Share investing was so popular that there were more than a million broker accounts
being opened every month since March leading to the first big drop.

 

[rimtas]

yep, this rise from early 2014 is either just a first wave of the larger advance, or china, as well as the rest of the world, will tank below 2009 bottom, most likely to 1000 level, and most likely fast, like in 12 month time.

 

[waterbottle]

Very cool seeing an 8% drop. Last time I saw this happen was during the GFC, albeit in markets other than China.

Chinese stock market falling -> margin loans start getting called.. how are those investors going to make up their losses? maybe they could dump a few of their international properties hmmmm

 

[gartley]

Just my analysis and opinion on current state of this market.

All bubbles/manias when they burst see prices regress back to levels where the mania first started. This index is no exception. Whilst this analysis is not set in concrete in terms of accuracy, it's a very good guide. For example the projection for a top was close to 5000 pts and the actual was 5166. Pretty close in my opinion.

That does not mean we bet the farm when a level is reached because markets can and do extend, but at least it's a useful guide and when a pre determined level is reached we can start to look for other clues within the pattern of trend to identify a high probability trade. (IPDA: Identify, Predict, Decide, Act

For now this analysis is looking for this index to eventually fall all the way back to 2522pts plus or minus 5% either way. Interestingly there is heavy support in this area. The accompanied cycles add weight to this argument. In the meantime we are close to support so a countertrend rally must be due soon.

 

[Ann]

I forgot I started this thread so I will re-post from another thread....

I have been watching the Shanghai Composite for years. I held an investment called China Growth Fund. I had no intention of selling it ever. I bought it when it was floated from a friend who was a chartist and an agent for AMP called Peter. In 2017 it was closed off because of a big investor who voted to get it closed down. Bastard!
Anyway I still keep an eye on it and saw that it was on the rise. I have just started looking at volumes and the EquiVolume chart and I looked at the SSEC EV. Well that was a site to see. I thought the chart had broken until I looked closer. Wednesday February 21 2018 saw a purchase of 1.44 billion shares at around 3200 yuan. That is the kind of money that could keep this index below 3200 forever or it could sell the index up to infinity for a very long time.

This is what the EquiVolume chart looks like....

 

[Ann]

They put a break on the rally on Friday.

 

[History Repeats]

Chinese share market the place to be. Beginning of a bull market.

 

[Ann]

Chinese share market the place to be. Beginning of a bull market.

As far as I can see the only way to invest in the Chinese shares is through Ishares China Fund IZZ. This is a fund run by Blackrock.
However this is not like the AMP China Growth fund I held which actually held stocks and bonds on mainland China. This mirrored the SSEC Index.

The Ishares IZZ is simply a fund holding the US Ishares ETF FXI. The FXI is a fund holding the 50 Large Cap Chinese stocks which are sold through the Hong Kong stock exchange.

Therefore to hold IZZ will not mirror the SSEC at all but an Australian listed fund holding a US listed fund. This brings in the added complication of currency fluctuations reflected in the price.
The FXI in US dollars has range traded mostly but the IZZ is a bit more dramatic.

I will put up a chart of both the Aussie version IZZ and the US version FXI of the same stock.

In my opinion this is not investing in the Chinese stock market. It simply has a Chinese flavour to it. More your special fried rice as opposed to Peking Duck. Although looking at the two charts maybe the Aussie version might be the better option.

 

[History Repeats]

There are number of options you can access the Chinese market but limited. 1) ETF, US listed 2) A50 futures 3) HK connect to Mainland. All you need is Interactive broker. But if you have families in China to open an account for you the better.

 

[Ann]

Found one! Just listed in November 2018
VanEck Vectors China New Economy

This ETF is 100% A-shares. They hold 120 stocks only in health care, technology, consumer staples and consumer discretionary. Hopefully this should mirror the SSEC fairly closely.

Chartwise, there appears to be a little weakness looking at Twiggs Money Flow Daily, it may see a fall in the price. Maybe, let's see.

The Positive and Negative Volume Indexes are very bullish. This has fairly low volumes but early days yet.

 

[Ann]

Citigroup Favors ‘High Octane’ China Stocks Over the S&P 500
Chinese stocks, already the world’s best performers this year, are still a great bet, especially when weighed against the U.S., according to Citigroup Inc.

American stocks are now pricing in 2019 profit growth that exceeds consensus expectations, amid a backdrop of negative earnings revisions and weakening economic data momentum, Citigroup strategists including Jeremy Hale wrote in a note Thursday. Conversely, Chinese earnings growth could re-accelerate in the second half, and get a boost from a resolution to the trade war, they said. More....

I will chart it tomorrow even though it was closed today for the Qingming Festival. CNEW isn't doing too badly either!

 

[Ann]

Larry Fink just revealed how BlackRock is going to keep growing at its torrid pace: China
Key Points

• The world’s largest asset manager plans to become a leading asset manager in China, which it thinks has the biggest growth opportunity in five years, BlackRock’s chief, Larry Fink, said in his annual letter to shareholders on Monday.
• “In China, which is one of the largest future growth opportunities for BlackRock, we are focused on building an onshore presence,” Fink says. “Our goal is to become one of the country’s leading global asset managers.”
• Despite the economic slowdown and the ongoing trade war, Fink still sees an “increasing demand” for “more diversified and long-term investment solutions” in China. Half of the asset growth over the next five years will come from Asia and largely China, Fink says. More..

Yesterdays trading saw a small fall in the SSEC down 0.054% but CNEW had a dump and closed on the rising support. Let's see what today brings...

 

[Ann]

I thought this was an interesting article about Chinese investment in Australia. It is a bit hard to read with the stuff over the article but perhaps may be of interest to someone.

Chinese investment in Australia takes a 36% dive, mining sector hit hardest




Chinese investment in Australia fell more than 36% in 2018, to its second lowest level since the mining and gas driven investment boom of 2008.

According to new research by the University of Sydney and professional auditing firm KPMG, Chinese investment in the country only reached A$8.2 billion last year, compared to A$13 billion in 2017.


This figure just beats the US$3.9 billion (A$5.1 billion) of Chinese investment recorded in 2010, following the Global Financial Crisis.

Chinese outbound direct investment into Australia has taken a hit.
Furthermore, this decline is despite China boosting its foreign investment on a global-scale, with the report showing a 4.2% growth in 2018 to US$129.8 billion (A$183 billion).


The University of Sydney and KPMG’s jointly produced report Demystifying Chinese Investment in Australia analysed Chinese overseas direct investment (ODI) into Australia in the 2018 calendar year and incorporated a survey that gathered insights from Chinese investors into the perceptions of the Australian investment climate.


One of the report co-authors, University of Sydney Chinese Business and Management Professor Hans Hendrischke, described the investment decline as a “significant withdrawal” particularly by Chinese state-owned enterprises, which has been influenced by Chinese capital controls, diplomatic relations and security concerns about Chinese investments in Australia. More...

Healthcare was the largest area of Chinese investment in Australia by sector in 2018.

 

[Ann]

The SSEC has had a bit of a retrace in the last few sessions, interesting to see if the retrace continues to the short term rising support or beyond. It may just bounce back and continue its track upward. It closed with a doji candlestick pattern which is a mark of indecision from the market but its close was higher than the previous day which to me appears ever so slightly bullish. Let's see.

One thing I find interesting about this index is the lack of support it gets from 'the smart money' as measured by the Negative Volume Index. The Positive Volume Index 'punters' is going up like a mad thing in a rush.

 

[Ann]

Chinese Stocks Rally Most in Two Weeks

China stocks rallied, after the central bank’s decision to inject cash into the financial system alleviated concerns that officials would hold back on stimulus.

The CSI 300 Index jumped 2.8 percent Tuesday, its biggest gain in more than two weeks, while the Shanghai Composite Index added 2.4 percent. The Hang Seng China Enterprises Index closed at a level that denotes a bull market after failing to hold that milestone earlier this month. Banks surged as the People’s Bank of China added funds to the money market after an 18-day dry spell. More..

 

[Ann]

A reasonable rise for SSEC yesterday after recent weakness, lets see what the rest of the week brings...

 

[Ann]

If anyone is interested in watching how the SSEC is traveling during opening hours which opens at 11.30am EST our time you can find it here....

 

[Ann]

This may be something to bring markets to heel, not just in China but world wide. Debt default.
It may be part of the reason for slowing the SSEC a bit recently, even with good economic data from China. So far today the SSEC is struggling to stay above yesterday's close.


Crisis at China's JPMorgan Wannabe Deepens on Bond Defaults

A debt crisis at one of China’s most well-known private conglomerates entered a new stage Thursday, with the company saying cross-default clauses had been triggered on dollar bonds worth $800 million.

China Minsheng Investment Group Corp. has appointed Kirkland & Ellis as legal adviser, according to a Hong Kong stock exchange filing, which also noted that banks have set up a creditor’s committee to try to stabilize the company. The cross default comes after CMIG’s problems spread to its affiliate Yida China Holdings Ltd., making some of the developer’s debt immediately payable, and causing a chain reaction back to the parent company’s own securities. More...