Shanghai: SSE Composite Index (.SSEC) stocks advance as sentiment remains positive on Beijing stimulus
Stocks in Hong Kong and mainland China advanced Friday on expectations of additional stimulus out of Beijing and eventual success in defeating the novel coronavirus.
The Hang Seng Index rose 0.3 per cent to 27,815.6. That left Hong Kong’s benchmark with a 1.4 per cent weekly gain.
On the mainland, the Shanghai Composite Index rose 0.4 per cent to 2,917, also leaving it with a weekly 1.4 per cent gain.
The Shenzhen Component Index climbed 0.5 per cent to 10,916.31, while the CSI 300 gauge of large caps traded in Shanghai and Shenzhen increased by 0.7 per cent to 3987.73.
“Sentiment is still driven by excessive liquidity and lower funding costs in mainland China,” said Alan Li, portfolio manager at Atta Capital. “People expect the positive impact from reducing interest and bank reserve rate rather than the threat from virus.”
China’s central bank has injected 1.7 trillion yuan liquidity into its banking system and issued various policies to increase loans, especially for small and medium-sized enterprises hit hard by the coronavirus.
Government advisers are circulating ideas in Beijing to further cut interest rates and allow the fiscal deficit ratio to exceed the 3 per cent level.
“The market is losing steam today,” said Linus Yip, chief strategist at First Shanghai Securities.
The real impact of the novel coronavirus on the whole China economy and performance of listed companies has not been reflected yet.
But Yip noted the latest numbers on the virus were lower than the big spike on Thursday after a change in how infections are counted, suggesting control efforts are working. “People are not that worried as there are policies issued to support companies,” he added.
The official death toll neared 1,400.
Technology companies in Hong Kong took a hit.
Alibaba fell 1 per cent to HK$215 after it reported strong December quarterly results but warned of upheaval to consumer behaviour by the coronavirus outbreak. Alibaba, the e-commerce giant that owns the South China Morning Post, is considered a bellwether for the entire Chinese economy.
Ping An Good Doctor, an online medical services platform whose usage surged amid the unprecedented lockdown of more than 50 million people in China, slid 2.8 per cent to HK$74.20.
“It’s the adjustment after rise,” Yip said. Ping An Good Doctor has risen 31 per cent so far this year.
Chinese smartphone maker Xiaomi declined 2.1 per cent to HK$13.10, even though the company launched its latest 5G phones Mi 10 series, with sales exceeding 200 million yuan today within the first minute of its online sales.
“Having good news is positive, but currently investors in the market are relatively cautious,” Yip said of Xiaomi’s stock price slip. “Some stocks, including Xiaomi, at a relatively high level would still face pressure to readjust.”
On the Hang Seng Index, property stocks gained, with Wharf Real Estate Investment Company rising 2.5 per cent and Country Garden advancing 2.4 per cent.
Meanwhile, stocks related to blood testing soared as plasma from recovered patients could be used in fighting the coronavirus. A gauge tracking 10 blood products companies by data provider Xuangubao rose 7.1 per cent. Shanghai RAAS Blood Products increased by 7.8 per cent to 10.18 yuan. Hualan Biological Engineering rose 3.8 per cent to 42.99 yuan.
Luxshare Precision Industry closed 0.6 per cent higher at 44.36 yuan, while Kweichow Moutai slipped 0.3 per cent to 1,088 yuan.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 3,040.31.
The projected lower bound is: 2,794.26.
The projected closing price is: 2,917.28.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 84.1047. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 7 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 45.23. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 7 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 4. This is not a topping or bottoming area. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 10.934 at 2,917.008. Volume was 33% above average (neutral) and Bollinger Bands were 167% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,863.26 2,976.36 2,948.29
Volatility: 51 27 22
Volume: 28,538,789,888 22,194,227,200 19,526,598,656
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
SSE COMPOSITE is currently 1.1% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 9 periods.