Shanghai Composite Index analysis
Shanghai Composite index chart attached , click on chart to enlarge image
Shanghai Composite major china’s stock market index down again 5% today and closed at 3507 , its peaked at 12th june when it made high at 5178 , since then its slipping and lost almost more than 30% from its highest point , in this breakdown chinese goverment tried to stop this by cutting interest rate and inject more funds but all steps to push markets higher gone in vein and today many shares halted trading as they hit 10% lower circuit , dont forget Shenzhen index ( 2nd china’s stock market index ) which features more tech companies has lost almost 40% from its highest level , Regulators trying their best to rescue markets they announced brokerage house will buy billions of stocks and they suspended new IPO listing for now and stopped margin trading . But investors have taken this otherwise and they are afraid that any alternate day there is a surprise in market so they are exiting and selling truck load stocks every day
Since 2009 chinese stock market is not following its economy its outperforming economy and delivering extra ordinary returns for investors and this made markets overvalued but retail investors has just entered in market as 40-50 million trading a/c opened in china in last one years and many small investors were hoping to cash the run but now they left exhausted and so their most of trading capital . According to a report china has lost approx $3.10 trillion market value in last 1 month , This is value of entire French stock market or 55% of Japan’s market . Foriegn investors need not to worry as they have only little 1.5% exposure in market because of china’s goverment rule , foriegn investments in entire market is total 1.5% . Now lets find technical levels of shanghai composite index
Major support of shanghai index at 3300 if market close below this for 2 days and sustain below then more 10-15% cut in market not ruled out and can hit below 3000 as well
A breather in market may come only if shanghai index hit 3800 and close above this level , closing above 3800 may take index upto 4000 – 4300
Shanghai Composite index analysis conclusion : Chinese stock markets are extremely volatile and 5-10% move is in their daily schedule and its looking weaker only.
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