Shanghai se Composite Index & The Margin Trading Story

shanghai se composite index

Shanghai SE Composite Index Outlook

Updated Aug 2019

Some experts are claiming that stocks in China have rallied sharply from their lows because of state-backed entities such as the unit known as the “National Team”, which is equivalent to the PPT  (Plunge Protection Team) in the U.S. Even if this is the case,  why point a finger when we are guilty of the same scandalous game? We taught the World that propping the markets is the way to go when one is trying to mask economic weakness. Our economic recovery is a hoax and is supported by hot money. Take away the money, and the recovery ends.

Must Read: Fed’s primary objective to Manipulate Masses & Markets

However, we feel the reason that the markets are moving higher is that astute individuals have stepped in to open long-term positions; they recognize a great deal when they see it after all the Shanghai Index shed over 50% from high to low.

Margin trading comeback could propel Chinese Markets Upwards

The chart above illustrates how strongly the Shanghai Index pulled back; history clearly indicates that the best time to buy is when blood is flowing in the streets. And one can safely assume that a lot of blood flowed in the streets and is still flowing after this back-breaking correction.

However, an additional factor could provide even more fuel to the current rally as Margin rules are expected to be eased once again.

Has The Shanghai SE Composite Index Bottomed or

Bloomberg states that the CSFC (China Securities Finance Corporation) will start offering loans again for  7 to 182 days.  This announcement was later posted on the CSFC’s website, and interest rates will be in the 3% range, which is relatively low and will most likely attract a lot of speculators.

“The loosening could reignite interest in the equity market, particularly as the regulators’ actions last year — to rein back private sector broker leverage — helped trigger the correction in equity prices,” Koon Chow, senior macro and currency strategist at Union Bancaire Privee in London told Bloomberg. “It does look like they want a second chance at growing the equity market. We shall all be watching very closely whether leveraged buying of the equity market balloons again.”

We have been stating all along that China makes for a great long term investment as it is set to become the world’s largest economy.  Astute investors should start compiling a list of stocks now and slowly opening long term positions in blue-chip companies or corporations that have strong quarterly earnings growth rates.

“The potential risks could be the brokerage firms misusing the leverage,” Wayne Lin, a New York-based money manager at QS Investors told Bloomberg. “If they use it for market-making then it’s good. If they use it for speculation, then it’s bad.”

Yes, the potential for abuse is always there, but that has not stopped Western firms from offering margins, and our markets are still doing well. Market booms and busts are part of the scheme the Federal Reserve orchestrates, and they are here to stay until the Fed is eliminated. Unfortunately, we do not see that happening anytime shortly; so the best game plan is to view all so-called market crashes as buying opportunities.

Tactical Investor China Stock Market Outlook Update Aug 2019

The above views were held back in 2016, and the Shanghai SE Composite Index did mount a rally, which then fizzled out due to the tariff war.  Things don’t appear to be easing up; take a look at the latest chart below:

Shanghai Composite Index;; no sign of a bottom in 2019

The index has put in a lower high, as indicated in the picture, and the momentum could change at any point as it appears poised to test its lows again. If 2920 is taken out on a monthly basis, It should lead to a series of new lows before a bottom is in place. At this point in time, we would avoid committing significant funds to China, but one can invest in individual stocks or ETFs that are defying the trend. For example (at least for now), NTES and TCHEY appear to be holding up well, while BABA is taking a beating.

Other Stories of Interest:

which of the following is the biggest pitfall of economic indicators

Which of the Following Is the Biggest Pitfall of Economic Indicators: Analysis

Feb 29, 2024 Which of the following is the biggest pitfall of economic indicators? Before diving into the core of ...
Smart Investing Unveiled: Perception Manipulation and Sentiment Indicator

Perception Manipulation: Mastering the Market with Strategic Insight

s Perception Manipulation & Investing: Sentiment Indicators Unveiled Updated Feb 24, 2024 By the ripe age of 18, the average ...
The Contrarian Outlook - Unleashing Success

Contrarian Outlook: A Pathway to Breakthrough or Breakdown

Contrarian Outlook: Balancing the Scale of Success and Risk Updated Feb 24, 20234 Introduction Adopting a Contrarian Outlook could be ...
Market Uncertainty: the emotion that separates traders from speculators

Market Uncertainty: A Challenge for Investors

Feb 22, 2024 Discerning the Hazards of Market Uncertainty with Poise Uncertainty, a state of being unsure or not knowing, ...
Stock market basics for beginners: do or die

Stock market basics for beginners: Adapt or Die

Stock market basics for beginners Updated Feb 22, 2024 A Contrarian Investor does not follow the Herd Sol Palha  Investing ...
Why Covered Calls are a Bad Strategy

The Unfortunate Truth: Why Covered Calls are a Bad Strategy

Feb 21, 2024 INTRODUCTION Covered calls have emerged as a favoured choice among the myriad methods, glittering with the illusion ...
DJU Index: To buy or not to

DJU Index: To Buy or Flee? Unraveling the Market Mystery

DJU Index: Decoding Signals – Is it Flashing Bullish or Bearish in the Market? Feb 21, 2024 Introduction: Intriguing Developments ...
Stock Market Psychology 101: Learn, Thrive, and Profit

Stock Market Psychology 101: Learn, Thrive, and Profit

Feb 20, 2024 Understanding Stock Market Psychology Through Charts for Beginners Understanding the stock market is akin to deciphering an ...
In 1929 the Stock Market Crashed Because of Greed, stupidity and arrogance

In 1929 the Stock Market Crashed Because of Greed

In 1929, the Stock Market Crashed Because of unchecked speculation Feb 20, 2024 Introduction to the 1929 Stock Market Crash ...
Palladium Forecast: Discovering the Hidden Bull Market Trend

Palladium Forecast: Unveiling the Stealth Bull Market

Palladium Forecast: Navigating the Silent Bull Market Unfolding Updated Feb 19, 2024 The lustrous white metal Palladium is silently scripting ...
The Journey to Remove Brainwashing

Unshackling Minds: The Journey to Remove Brainwashing

Feb 16, 2024 Unshackled Minds: The Journey to Remove Brainwashing Introduction: The Tangled Threads of Thought Manipulation In the grand ...
Mastering the Trading Range

Mastering the Trading Range: Unlocking the Potential for Explosive Gains

The Trading Range:  Masterfully Navigating Volatility  Feb 14, 2024  Introduction In the ever-fluctuating world of stock markets, mastering the trading ...
Unveiling the VIX Fear Indicator: Best time to buy is when the crowd is scared

Unveiling the VIX Fear Indicator: A Case Study in Market Volatility

Harnessing the Power of the VIX Fear Indicator: A 2016 Case Study Updated Feb 12, 2024 The VIX fear indicator, ...
Mind Games: Unmasking Brainwashing Techniques in Institutions & Media

Mind Games: Unmasking Brainwashing Techniques in Institutions & Media

Unmasking the Invisible: The Subtle Art of Brainwashing in Institutions & Media Updated Feb 11, 2024   Introduction: Intriguing Insights ...
The Gamblers Mindset: Exploring the Hidden Desire for Defeat

The Gamblers Mindset: The Enigmatic Urge to Embrace Loss

The Gamblers Mindset: Exploring the Secret Desire to Lose Syndrome Updated Feb 11, 2024 Introduction: The Investor's Paradox: Unraveling the ...