China stock market opportunity
Editor's note: Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for Chinese mainland media for more than a decade. Guppy appears regularly on CNBC Asia and is known as "The Chart Man." He is a national board member of the Australia China Business Council. The article reflects the author's opinions and not necessarily the views of CGTN.
Bargain hunters gather when markets get smashed because in this situation good stocks get taken down along with every other stock. These general market sell-offs are a buying opportunity for some stocks. This week's rebound in the Shanghai Index has as much to do with bargain hunting as it does with the soothing comments coming from the Vice Chairman of China Securities Regulatory Commission who hosted a virtual call with global investment banks. Broader media comments stressed China's stable economic growth which would serve as a strong foundation for the healthy development of capital markets.
The immediate trigger for the sell-off was the decision to strictly limit the operations of the education coaching industry. In reaction to the education industry announcement, the Shanghai index smashed through the support offered by the long-term uptrend line that defined the index activity from March 2021. It's an open question as to how much of this selling was triggered by over-reaction from Western fund managers.
The sharp three-day fall reached a low point and then quickly rebounded to close higher. Individual stocks across the board tumbled irrespective of any connection with the education coaching industry.
The selling also hit companies listed outside of China, such as TAL Education, China's tutoring company, which is listed in New York. The selling came after TAL had already lost three-quarters of its market value in the previous month. The obvious question to ask is why had the TAL stock price fallen in the previous month? The answer lies in previously announced government decisions.
Although it seemed to come without warning the move was in fact foreshadowed earlier in 2021. In May China passed a set of guidelines to ease the burden of excessive homework and off-campus tutoring for students undergoing compulsory education. Last week the State Council introduced the new regulations.
Some analysts claim the China market is uniquely susceptible to government interference, but this conclusion is incorrect. Markets in the U.S. shudder, shiver and collapse in response to government decisions like the so-called "taper tantrums." Announcements by the U.S. Federal Reserve are closely watched because this government intervention can cause markets to soar, or crash. The current focus on the U.S. 10-year bond rate leaves investors at the mercy of government decisions.
The China market is no different when it comes to government decisions and their impact on market behavior.
The market fall offered several ways for investors to snap up bargains. The first method applies the traditional investment metrics summed by the legendary Warren Buffet. "Buy good companies at cheap prices."
PM Capital, a fund manager that specializes in global equities, bought Chinese stocks through the tumult. "Older-economy stocks like telcos and banks that have traditionally been in state-controlled sectors are trading at historic lows on a relative basis," fund manager Kevin Bertoli said.
Alibaba's flotation in Hong Kong last year is the beginning of this trend which will be accelerated by recent U.S. rulings that make it more difficult for Chinese companies to initial public offering (IPO) in the U.S.
China International Capital Corp (CICC), China's investment bank, is a typical example of the opportunity. The bank will benefit from the trend among Chinese companies which are listed overseas to return to China listings. Sam Le Cornu, co-founder and chief executive of Stonehorn Global Partners, which manages $450 million in Asian equities, noted that "As [companies] come home CICC is collecting on the listing fees. We see there are opportunities there and there will be more that come back to Hong Kong."
The second method used by bargain hunters is trend analysis applied to a chart of price activity. Solid and sustainable uptrend is defined in many ways including the application of a simple trend line, the use of two or more moving averages or a selection of other trend identification techniques. All of these tools are readily available on charting software programs and services. These trend identification techniques all have one feature in common.
A rapid fall in a previously very strong uptrend is most likely to be temporary and an overreaction to a general market retreat. Investors watch for these price retreats to test market support levels. A successful test signals the opportunity for a rapid rebound and resumption of the uptrend. This is a well established strategy of buying on trend weakness and is effectively applied in selected market sectors.
The rapid fall in the Shanghai Index obscured the fundamental long-term strength of the Chinese economy and this makes for fertile ground for bargain hunting investors. The sell-off is a fast disappearing opportunity as the market rebounds from its lows.
(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com.)
相关阅读
-
澳洲学者:美国说什么“强化供应链”,到头来还是为打压中国
近日,“印太经济框架” (IPEF) 下的供应链协议生效。事实上,IPEF是美国对华战略竞争的地缘政治工具,它利用其他成员国寻求供应链多元化的本意,完全以美国自身利益和战略目标为出发点,旨在围堵、遏制中国经济。
-
澳专家:G7广岛峰会嘴上说的都是“秩序”,心里想的都是“霸权”
今年七国集团 (G7) 峰会在日本广岛举办,首要议程仍是维护霸权秩序。广岛是第一个遭到核武器袭击摧毁的城市,这一会议地点和G7不断变化的关注焦点相结合,讽刺意味浓烈。G7的成立主要是为了促进共同的宏观经济倡议,以应对当代经济问题,但现在它正蓄势发起经济战。
-
Australia's adversarial China policy
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for Chinese mainland media for more than a decade. Guppy appears regularly on CNBC Asia and is known as "The Chart Man."
-
G7 blue dots or BRI red spots?
Editor's note: Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for Chinese mainland media for more than a decade.
-
Australia on a 'mission to provoke imperial resurrection'
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for Chinese mainland media for more than a decade.
-
Australia pines for the past
Editor's note: Daryl Guppy is an international financial technical analysis expert and special consultant to AxiCorp. He has provided weekly Shanghai Index analysis for media for the Chinese mainland for more than a decade. Guppy appears regularly on CNBC Asia and is known as "The Chart Man." He is a national board member of the Australia China Business Council. The article reflects the author's opinions and not necessarily the views of CGTN.
-
Essential concepts to embrace and discard to understand China
Editor's note: Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for media for the Chinese mainland for more than a decade. Guppy appears regularly on CNBC Asia and is known as "The Chart Man." He is a national board member of the Australia China Business Council. The article reflects the author's opinions, and not necessarily the views of CGTN.
-
The ghost of weapons for mass deception
Editor's note: Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for Chinese mainland media for more than a decade.
免责声明:本网所发所有文章,包括本网原创、编译及转发的第三方稿件及评论,均不构成任何投资建议,交易操作或投资决定请询问专业人士。
热门点击
-
- 习近平出席亚太经合组织第三十一次领导人非正式会议并发表重要讲话
-
- 【11.18】今日财经时讯及重要市场资讯
-
- 【G20观察】:阿尔巴尼斯总理今日出席G20峰会并将和习近平主席会晤 誓言捍卫开放经济和贸易自由化 (更新)
-
- ASX200指数今日创出历史新高 跃上8400点 尾盘冲高后回落 摩根士丹利预测明年目标8500点
-
- 【11.21】今日财经时讯及重要市场资讯
-
- 【11.19】今日财经时讯及重要市场资讯
-
- 紫金矿业参股Xanadu Mines Ltd(ASX:XAM)蒙古国铜金矿项目PFS发布在即 公司董事长近期表示项目价值被二级市场“打折”定价(更新)
-
- 【11.20】今日财经时讯及重要市场资讯
-
- 澳洲前两大养老基金吸收全澳一半以上新增退休储蓄
-
- 【异动股】Noviqtech (ASX:NVQ)暴涨180%:知名加密币技术投资人Tony G战略入股
-
- 澳大利亚商务及旅游部部长法瑞尔 :“中国依然是我们最大的贸易伙伴 在可预见的未来仍将如此”
-
- 澳股创出新高后回落整理 澳洲人工智能公司Appen Ltd (ASX:APX)周三股价大幅下挫 单日放量跌幅逾一成
-
- 【异动股】Rectifier Technologies(ASX:RFT) 飙升33%:电动汽车充电模块市场迎复苏
-
- 澳股创出新高后回落整理 澳洲人工智能公司Appen Ltd (ASX:APX)周三股价大幅下挫 单日放量跌幅逾一成
-
- 2024年澳洲百强会计师事务所榜单出炉 德勤高居榜首