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Shanghai: SSE Composite Index (.SSEC) global investors who crave for a bite of China’s economic growth dividends have more channels

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Shanghai: SSE Composite Index (.SSEC) global investors who crave for a bite of China’s economic growth dividends have more channels

Starting from Monday, global investors who crave for a bite of China’s economic growth dividends have more channels.

Nearly 1,100 companies listed on China’s A-shares market became eligible for investment by certain overseas funds and other institutional investors as these shares were officially included in a widely-tracked global benchmark.

FTSE Russell, a leading global multi-asset index, data and analytics provider, Monday included China’s A-shares in the FTSE Global Equity Index Series (FTSE GEIS) as a secondary emerging market.

Implementation of phase 1 will run from June 24 till March 23, 2020, during which 25 percent of the investable market capitalization of eligible large-, mid-, and small-cap China A-shares will be added to the FTSE GEIS and derived indexes.

At a launch ceremony held at the Shenzhen Stock Exchange last Friday, FTSE Russell’s CEO Waqas Samad said the inclusion would be an important mark of the development and opening-up of China’s stock market.

FTSE Russell will continue to provide benchmark indexes and innovative analytics solutions to meet the demands of global investors and promote investment in Chinese stocks and bond products, Samad said.

The FTSE inclusion of A-shares was expected to bring 10 billion U.S. dollars of inflow in total, including 2 billion dollars in June, according to Thomas Fang, Head of China Equities at UBS.

Central bank data showed that foreign investors held 1.68 trillion yuan of A shares by end-March 2019, accounting for 3 percent of the total market cap of the onshore equity market, up from 0.8 percent in November 2015.

Foreign investors as a group have surpassed insurers as the largest A-shares holder, and with the help of the weight increase of various indexes, are likely to rival domestic mutual funds soon, according to Fang. “We expect the largely retail-driven A-shares market to become more institutionalized over time.”

Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said the inclusion fully reflected the trust of the international investment community in China’s positive economic fundamentals and long-term trajectory as well as the reform and opening-up of its capital market.

Chinese stocks closed mixed on Monday, with the benchmark Shanghai Composite Index up 0.21 percent, at 3,008.15 points. The Shanghai Composite Index has risen by over 20 percent so far this year.

The FTSE inclusion came after the Shanghai-London Stock Connect program opened for trading last week and global index provider MSCI decided earlier this month to increase index weighting for China A-shares.

China is embarking on the next stage of its integration into global financial markets with the inclusion of Chinese stocks and bonds in a large number of global indexes, the International Monetary Fund (IMF) said in a blog last week.

“It is a stage that is likely to see a fresh flood of overseas investment, improved liquidity, better governance, and a broader range of instruments,” the blog said.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 3,131.45.

The projected lower bound is: 2,875.58.

The projected closing price is: 3,003.52.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.1359. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 61.93. 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 30 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 166.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 9 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 19 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 6.168 at 3,008.148. Volume was 32% below average (neutral) and Bollinger Bands were 45% narrower than normal.

Open High Low Close Volume___
3,004.2893,012.8262,994.4223,008.14821,049,389,056

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 2,932.06 2,987.85 2,789.26
Volatility: 21 27 27
Volume: 22,500,816,896 24,900,823,040 21,957,257,216

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.

Summary

SSE COMPOSITE is currently 7.8% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on .SSEC and have had this outlook for the last 6 periods.

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