Updated March 2022
China Stock Market Today
If you look at FXI, it has had a nice run since Oct 2013 (in fact, we recommended this play to individuals willing to invest for the long haul). It traded as high as 42 before pulling back. The 40-42 range is a zone of pretty strong resistance, so this pullback is to be expected.
The next leg up should propel it past this point, and once former resistance becomes support, one can expect the Chinese markets to take off. When FXI closes above 42 on a monthly basis, it should easily be in a position to test the 50-54 ranges before running into any resistance. We fully expect FXI to eventually trade to new all-time highs, and once the current all-time is taken out, the path for a move to the 140-plus range will be in place. Market Update Sept 30, 2014
FXI is currently undergoing a healthy correction and upon examination of a long-term chart, the current price is truly undervalued. If the price drops below $37 on a weekly basis, we can expect a test of the 34 ranges, which would present an excellent long-term entry point. Additionally, many Russian stocks such as VIP and MBT are trading at tantalizing levels from a long-term perspective, but investors should have a minimum 2-3 year timeline. We are currently waiting for these stocks to stabilize before issuing new entry points and are closely monitoring FXI, VIP, MBT, and other potential investment opportunities.
China Stock Market Today Update
The Shanghai Index has experienced a notable rally from its recent lows and is currently attempting to establish a level of support in the 3400 range. However, our analysis suggests that there is still a lack of widespread concern among investors, which leads us to believe that a test of the 2500-2700 range is likely. In the event that the 3400 level is breached on a weekly basis, we believe that a test of the 2700 range will be an inevitable outcome. Nevertheless, from a long-term perspective, we view any level below 3000 as an attractive entry point for investors.
At this juncture, the discerning investor should commence the compilation of a roster of equities that they desire to acquire. This action will ensure that when the optimal opportunity presents itself, one is prepared to promptly take advantage of it.
We are currently engaged in the creation of such a list and the moment our trend indicator generates a buy signal, we shall be primed for action. Our aforementioned trend indicator was instrumental in guiding our entry into the market between late 2013 and 2014, as well as our exit near the apex in June. Although we did not precisely time the peak, we were not compelled to do so based on our entry points. Endeavouring to pinpoint the precise peak or trough is a futile endeavour.
China Update Aug 2019
The Chinese markets traded to new lows and now they appear to have put in a lower high, and this is generally not a positive development. A lower high indicates that the markets are sensing that conditions will not improve in the near term. In fact, they appear to be pricing in an escalation in this trade war. The way you can tell if a country is winning or losing the war is to look at the nation’s Stock Market. The Dow is almost trading 50% higher since Trump took office, while the Shanghai composite is now in negative territory.
Until this conflict is resolved, China is going to be on the receiving end of the stick. It would be in their best interests to resolve this conflict as soon as possible instead of trying to delay the inevitable. If 39 is breached on a monthly basis (above chart), then FXI and by default, the Shanghai composite index will be on course to put in a series of new lows.
Random Thoughts
The economy of China is driven by three great engines, namely exports, investments, and consumption. Thus, it follows that if the tensions continue to escalate, the growth of China shall suffer much greater harm than that of the United States, and this damage shall extend far beyond the scope suggested by the trade data.
Furthermore, the trade war shall result in the restructuring of the time-honoured global supply chain, which has been the backbone of China’s economic success. For the past forty years, China’s prosperity has been built on its role as the world’s manufacturing hub. However, a prolonged trade war shall force foreign companies to broaden their horizons and seek alternative countries for investment, such as Vietnam, Malaysia, Indonesia, and Mexico. These countries shall offer safer havens for production lines, allowing firms to bypass the increased costs incurred by the trade war.
Forbes Claims China Is Losing The Trade
Verily, the recent apprehension of Huawei CFO Meng Wanzhou in Canada for violating U.S. sanctions law, followed by the dismissal of Huawei sales executive Wang Weijing in Poland last week, doth reveal that China may, indeed, play the part of a scoundrel, as Washington doth suspect. The Poland tale hath its roots in allegations of espionage, as Wang did supposedly seek trade secrets from the government.
These unflattering headlines doth showcase how Chinese technology companies may have attained their positions of power by way of imitating foreign technologies through joint venture agreements or through nefarious acts such as intellectual property theft and corporate spying. Huawei, a leading private technology firm in China, is a rival of the likes of Cisco Systems on a global scale.
At the outset of the trade war, China did reckon that it might garner the support of the European Union, as they, too, did hold a certain enmity toward President Trump. However, China did fail in its bid to win over the EU, and the Shanghai Composite hath since taken a tumble of roughly 30% over the past year. Only Turkey doth fare worse in the world of finance.
“China must take a more assertive approach to stabilize its economic growth,” saith the economists of Nomura, led by Ting Lu of Hong Kong, in a note that was published this morn. Nomura doth anticipate a worsening of China’s growth over the next half-year. Full Story
Other Articles of Interest
Two key Market Indicators rendered useless (April 20)
Not Time To Short The Markets Yet As Long-Term Trend Still Intact (Oct 24)
Dollar Bull Still In-Play (Oct 24)
Market Trend is up and all pullbacks are buying opportunities (Oct 2)
Gold Approaching Critical Juncture (Sept 30)
Copper at make or break point (Sept 27)
China; A Great Time To Buy
