Shanghai: SSE Composite Index (.SSEC) investors ponder the extent and impact of Beijing’s interest rate reform
China and Hong Kong stocks barely moved on Tuesday as investors took a breather and pondered the extent and impact of Beijing’s interest rate reform.
The CSI300 index was unchanged at 3,790.92 at the end of the morning session, while the Shanghai Composite Index gained 0.1% to 2,885.17.
The Hang Seng index was unchanged at 26,294.08, while the Hong Kong China Enterprises Index gained 0.5% to 10,160.12.
China’s new lending reference rate was set slightly lower on Tuesday in the first publication of the benchmark since the central bank announced interest rate reforms designed to lower corporate borrowing costs.
The People’s Bank of China (PBOC) on Saturday said the Loan Prime Rate (LPR) would become the lending benchmark for banks when setting rates for new loans to households and businesses, instead of the central bank’s existing benchmark one-year lending rate.
Analysts and investors say the reforms are an official attempt to lower financing costs in the world’s second largest economy, which has faced continued pressure from weakening demand at home and an extended trade war with the United States.
“Overall, it is a modest cut in line with our expectations, though in the future, it’s expected the LPR could go further lower, as China has its own target of steering funding costs lower,” said Shen Xinfeng, analyst with Northeast Securities.
The largest percentage losers in the Shanghai index were Shandong Pharmaceutical Glass Co Ltd, down 9.98%, followed by Qingdao Tianhua Institute of Chemistry Engineering Co Ltd, losing 5.96% and Asia Cuanon Technology Shanghai Co Ltd, down by 5.62%.
The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 10.8%, followed by ANTA Sports Products Ltd, gaining 4.79% and Sinopharm Group Co Ltd , up by 3.31%.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 2,898.07.
The projected upper bound is: 2,961.56.
The projected lower bound is: 2,796.61.
The projected closing price is: 2,879.09.
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 26 white candles and 24 black candles for a net of 2 white candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 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 91.7183. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 8 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 52.43. 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 8 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 112.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 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 2 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -3.095 at 2,880.001. Volume was 10% below average (neutral) and Bollinger Bands were 2% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,816.19 2,913.34 2,835.09
Volatility: 16 18 25
Volume: 15,675,696,128 17,592,879,104 22,773,817,344
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 1.6% above its 200-period moving average and is in an downward trend. Volatility is 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 25 periods.