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Investing in China’s Stock Exchanges
Investing in China’s Stock Exchanges

Investing in China’s Stock Exchanges

China is the world’s second-largest economy, with a population of 1.4 billion contributing around 30 per cent of global growth in the last eight years.

China made impressive economic and social developments the previous years, but the market reforms are incomplete, and it’s per capita income remains at 25% of the average of the high-income countries. Chinese Government forecasts that it will eliminate absolute poverty by 2022. Statistics show that there are an estimated 372.8 million people below the “upper middle income” international poverty line of $5.50 a day.   

The Chinese economy has registered an impressive growth the last decade but now faces a major threat as USA has imposed tariffs to Chinese products. Chinese companies now facing increasing market-access challenges in the US, especially in B2B markets. A recent example is the ban of Huawei Technologies and ZTE from the telecom-infrastructure market, but also, federal government restricting its purchases of goods and services from Chinese companies but also discourages its core vendors from buying from China.

According to many analysts, China will overtake the U.S. by 2030 to become the No. 1 economy by GDP in the world.  China’s size and GDP growth rate, which hit 6.6% in 2018 and forecasts setting the growth rate at 6.3% for 2019, it’s not a surprise that global traders and investors are interested in China stocks and China funds.

Investing in Chinese companies involve risks such as currency risk (forex), volatility, regulatory risks, and country risk. Traders can buy stocks listed on the main Chinese stock exchanges, the Hong Kong Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange. There are also many Chinese companies, that are listed in US Stock Exchanges through ADR’s.

Shenzhen Composite Index Technical Analysis

The Shenzhen Composite Index (SZSE Composite) is trading at 1631.88 registering gains for the second day in a row after yesterday the SZSE Composite tested successfully the 50-day moving average and managed to rebound keeping the bullish momentum for the index as now it trades above all major moving averages. On the upside immediate resistance stands at 1,696 the high from September 11th 2019, while the next resistance is at 1,798 the high from April 8th 2019.

Shanghai Composite Technical Analysis

The Shanghai Composite Index trading at 2,947 gaining 18.20% since the beginning of 2019 while for the 12-month period is adding 14.10%. In the daily chart, the momentum is positive as the index is trading above all major daily moving averages. The index found support at 2,920 the 100-day moving average. On the upside, first resistance for the Shanghai Composite Index stands at 3,042 the high from September 16th, while the next barrier will be the high from April 22nd at 3,274. On the flipside support for the index stands at 2,885 the 200-day moving average while next support is at 2,764 the low from August 15th.

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