Shanghai Stock Index Analysis Part 2

There has been speculation of a bear market taking place and after Shanghai Stock Index hit 3587 points in 29 January 2018, it had been in a decline to recent low 2449 points in 19 October 2018, a whopping estimate 9 months of decline ever since longest correction or retracement ever, probably due to a few factors that drive the emerging market rout, to name a few.

Shanghai Stock Exchange recent weakness suggest low valuations may attract the global investor attention, offers attractive yields and opportunity to stay invested.

1) USD strength is at its peak, have limited upside price pressure at 96 to 97 price level of USD spot index.

2) US 10 year Treasury rising yields to recent high of 3.248% seen in 5 October 2018, reach 3 year high since July 2016 of all time low 1.321% and most financial analysts interviewed by Bloomberg and CNBC are projecting the rising yields to reach 3.5% by end of the year 2018.

https://www.cnbc.com/quotes/?symbol=US10Y

Comparison Chart Between US Dollar and US 10 Year Treasury Yield

3) US Mid Term Elections in November 2018 that seen delay in negotiation between US & China to resolve Trade Tariffs differences.

4) Severity of Trade War tensions that seen global financial markets oversold and overblown.

However. there are a few positive market catalyst released so far that could drive the global financial markets into year end rally

1) US Mid Term Election is over where President Trump's republican party lose the House of Representative to Democrats Party, would probably see more gridlocks in policy making. may see negotiation to resolve trade tariffs dispute taking place soon.

2) Trade War tensions to ease dramatically, win-win scenario for both US & China.

3) MSCI: publish news on 6 November on the eve of US mid term elections to increase Chinese Shares weightage from 5% to 20% in year 2019 in its MSCI emerging market indexes. MSCI：中国内地股票权重提高至20%将吸引逾800亿美元, 国际知名指数公司MSCI明晟拟议中的到2019年将中国内地股票在其全球基准指数中的权重由5%提高至20%，可能会吸引逾800亿美元的新外国投资进入这个全球第二大经济体

https://www.cnbc.com/2018/09/26/msci-considers-increasing-chinese-share-weight-in-its-indexes.html?fbclid=IwAR3e4mNL1JKwm6HAqpxFLPj7HdBSyd-RCwJIz5cQ6Rat8G7TD9H1ccSpPMQ 

4) Bear market headline splash all over international news media.

5) Shanghai Stock Index is trading at its support based on technical analysis.

6) Capricorn effect or known as January Barometer where between the months of October to January would see a positive gains, better months for equities stock market performance.

7) Yuan / Reminbi approaching USDCNH / USDCNY 7 dollars resistance.

Technical Analysis:

Shanghai Stock Exchange Index - 8 Nov 2018

 Shanghai Stock Exchange Index - 8 Nov 2018 with Technical Analysis

CSI 300 ETF - 8 November 2018 

CSI 300 ETF - 8 November 2018 with Technical Analysis

A50 ETF - 8 November 2018

A50 ETF - 8 November 2018 with Technical Analysis

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.