Shanghai Stock Exchange Index/ Hang Seng Index Charting Analysis

The news of Chinese stock index had been absorbed into MSCI emerging markets indices published on international news portal like CNBC and bloomberg signals there are ample opportunities to tap and seize.

Over the longer term horizon, foreign institutional funds are flowing into Chinese economy, the volume could push assets class into the highs especially into assets class of equities, properties, bonds, commodities and currency (yuan/renminbi).

Amidst over the longer term outlook of appreciating assets value of various assets class, there would be boom and bust, therefore we must understand how to determine overbought/oversold range by applying Asian investment guru master Hu Liyang's half theory which I had been applying his theory and it had shown amazing results.

In one of his books, he wrote on a particular topic of how foreign institutional hot money inflows is determine by 4 highs and 1 low with a global investment framework theme like equating to "BRICs", "VISTA" and "Frontier" markets. example of "BRICs" stands for Brazil, Russia, India, China and South Africa.

The 4 highs 1 lows are;

Highs:

1) High GDP growth

2) High domestic demand growth

3) High currency appreciation (yuan/renminbi) gain

4) High investment securities gain

Low:

1) Low consumer price index (CPI)

Shanghai Stock Exchange Index rallied from 2361 points in Oct 2014 to June 2015 high of 5178 points in a short span of 8 months, on expectations of Chinese markets MSCI inclusion 

and the launch of Shanghai Hong Kong Stock Connect link which is part of the financial market reforms and opening up its market to foreign investors.

With the MSCI Emerging Market Index inclusion, expectations of challenging recent June 2015 high of 5178 points is valid and subsequently all time time of 6124 points in October 2007.

Base on Technical Analysis (TA) on Shanghai Stock Exchange Index charting, it displays a double bottom chart formation in green line and a price channel using black lines as a reference, where its resistance turn support to form new uptrend.

Shanghai Stock Exchange

Hong Kong (SAR) being part of China of one country 2 systems would benefit greatly when they are intertwined by market connectivity. example, Shanghai Hong Kong stock connect, Shenzhen Hong Kong stock connect. 

Hang Seng all time high in October 2007 is 31958 followed by October 2008 low is 10676 during the sub prime mortgage crisis.

Base on Technical Analysis (TA), with Chinese markets absorbed into MSCI emerging market indices more foreign institutional flows will push both Hang Seng Index and Shanghai Stock Exchange Index higher challenging all time high of 31958, breaking and creating new all time high. Possible range 35000 to 38000 levels.

Hang Seng

Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.