China & HK Archives - Page 43 of 61

December 3, 2012

China: Uncertain foundations – FT.com

Simon Rabinovitch at FT writes:

Shadow banking is flourishing in China, helping to make non-bank institutions as big a source of credit as banks themselves since July – something that has never happened before. Chinese bankers, leading rating agencies and the International Monetary Fund have all warned about risks from the surge in loosely regulated lending, with some even pointing to parallels with developed economies before the global financial crisis. But the Chinese government itself has taken a permissive stance.

Highly regulated banks restricted lending to property developers following concerns over a real estate bubble. But regulators turned a blind eye to unregulated shadow lenders who borrow short — normally no more than 3 months — and lend long. They may believe this will sustain economic growth while protecting banks from risky lending. The thinly capitalized sector, however, is at risk from defaults and a consequent liquidity crisis which could spread to the banking sector.

via Uncertain foundations – FT.com.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

November 28, 2012

Australia: ASX 200 resistance

The ASX 200 encountered resistance at the descending trendline — around 4450. A sharp rise in 21-day Twiggs Money Flow indicates short-term buying pressure. Breakout would indicate a primary advance to 4750*. Retreat below 4400 is less likely but would suggest a decline to 4250.

ASX 200 Index

* Target calculation: 4550 + ( 4550 – 4350 ) = 4750

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 27, 2012

China: Shanghai breaks support

China’s Shanghai Composite Index followed the DJ Shanghai Index, breaking primary support at 2000 to warn of a down-swing to 1850*. Completion of another 63-day Twiggs Momentum peak, this time deep below zero, would indicate a strong primary down-trend. Recovery above 2000 is unlikely but would suggest a bear trap.

Shanghai Composite Index

* Target calculation: 2000 – ( 2150 – 2000 ) = 1850

Dow Jones Shanghai Index earlier broke support at 250, signaling a primary decline. 13-Week Twiggs Money Flow below zero warns of selling pressure.

Dow Jones Shanghai Index

* Target calculation: 250 – ( 270 – 250 ) = 230

Hong Kong’s Hang Seng Index is far stronger, testing resistance at 22000. But a sharp fall on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breakout above 22000 would signal an advance to 24000* but reversal below 21000 is as likely and would indicate a test of the rising trendline at 20000.

Hang Seng Index

* Target calculation: 22 + ( 22 – 20 ) = 24

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 27, 2012

EconoMonitor » The U.S. is sliding down an investment slope

Thomas Grennes & Andris Strazds highlight the contraction in US private investment since the GFC:

Recent evidence…….suggests that while U.S. GDP growth has surpassed its pre-crisis level, investment has been declining. A comparison with China would not be appropriate due to differences in growth rates and the level of economic development, but even a comparison with the EU-15 is not flattering to the U.S. A look at the Gross Fixed Capital Formation to GDP ratio shows that since the onset of the financial crisis in 2007 the U.S. has been lagging behind the EU-15 countries with respect to investment in long-term assets…….

The chances of China successfully switching from an export-driven economy to internal markets are small. And the US is unlikely to materially lift exports. So their conclusion appears unavoidable.

If insufficient investment results in the U.S. having to adjust by lowering consumption rather than increasing output, the rest of the world will also have to adjust in a way that is reducing growth; namely, produce less.

via EconoMonitor : Thoughts From Across the Atlantic » The U.S. Is Sliding Down an Investment Slope.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 22, 2012

Nomura: China recovery unsustainable | | MacroBusiness

Interesting take by Nomura, reported by FT Alphaville.

Nomura thinks that after this year, China’s days of 8 per cent-plus growth are finished, and that stimulus efforts will run into problems with CPI inflation, not to mention its own credit system…..

via Nomura: China recovery unsustainable | | MacroBusiness.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 21, 2012

Asia: India & China weaken

India’s Sensex broke support at 18500, warning of another correction. Troughs above zero on 13-week Twiggs Money Flow indicate long-term buying pressure; so the correction is likely to be mild. Respect of 18000 would suggest a strong primary up-trend, with an initial target of 20000*.

Sensex Index

* Target calculation: 19 + ( 19 – 18 ) = 20

Singapore’s Straits Times Index broke support at 3000, warning of a correction. Expect support at the lower trend channel. Oscillation of 63-day Twiggs Momentum around zero would reflect a ranging market.

Singapore Straits Times Index

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

China’s Shanghai Composite Index is testing primary support at 2000. Breakout would offer a target of 1850*. Reversal of 13-week Twiggs Money Flow below zero warns of selling pressure. Recovery above 2150 is unlikely but would complete a double bottom reversal.

Shanghai Composite Index

* Target calculation: 2000 – ( 2150 – 2000 ) = 1850

The Hang Seng Index is undergoing a correction. Breach of 21000 would indicate a test of 20000 and the rising trendline. Falling 13-week Twiggs Money Flow indicates medium-term selling pressure but the long-term picture remains bullish with, most likely, another trough above zero. Breakout above 22000 is unlikely at present but would signal an advance to 24000*.

Hang Seng Index

* Target calculation: 22 + ( 22 – 20 ) = 24

Japan’s Nikkei 225 rallied to test resistance at 9200/9300. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 9300 would test 10200. Respect of resistance is unlikely but would suggest another test of primary support at 8200.

Nikkei 225 Index

* Target calculation: 9200 + ( 9200 – 8200 ) = 10200

South Korea’s Seoul Composite Index found support at 1860; recovery above 1900 would suggest another test of 2000. A 13-week Twiggs Money Flow trough above zero would indicate long-term buying pressure. Recovery above 2000 would signal another primary advance.

Seoul Composite Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 19, 2012

Australia: ASX 200 and Shanghai find support

The ASX 200 found short-term support at 4350. Expect a rally to test the declining trendline at 4450 but this does not indicate the end of the correction. The 21-day Twiggs Money Flow peak below zero reflects medium-term selling pressure. Respect of resistance at 4450 would signal another decline.

ASX 200 Index

* Target calculation: 4450 + ( 4450 – 4000 ) = 4900

Dow Jones Shanghai Index broke its September low of 249 but rallied strongly towards the close. Bullish divergence on 21-day Twiggs Money Flow indicates medium-term buying pressure. Follow-through above 250 would indicate a rally to the October high of 266.
DJ Shanghai Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 13, 2012

Asia: India strong, China & Japan weaken

India’s Sensex continues to hold above 18500, suggesting a healthy up-trend. Rising troughs above zero on 13-week Twiggs Money Flow indicate buying pressure. Breakout above 19000 would signal an advance to 21000*.

Sensex Index

* Target calculation: 18.5 + ( 18.5 – 16.0 ) = 21.0

Singapore’s Straits Times Index continues to test support at 3000. Breach of 2950 would test the lower trend channel, while breakout above 3100 would indicate an advance to 3300*. Oscillation of 63-day Twiggs Momentum around zero would reflect a ranging market.

Singapore Straits Times Index

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

Japan’s Nikkei 225 is headed for another test of medium-term support at 8450 after latest economic numbers warn of a contraction. Failure would test primary support at 8200. Oscillation of 13-week Twiggs Money Flow largely below zero indicates selling pressure. Breach of 8200 would signal a decline to 7200*.

Nikkei 225 Index

* Target calculation: 8200 – ( 9200 – 8200 ) = 7200

South Korea’s Seoul Composite Index is testing medium-term support at 1880 but rising 13-week Twiggs Money Flow reflects buying pressure. Recovery above 1960 would test this year’s high at 2060.

Seoul Composite Index

China’s Dow Jones Shanghai Index is testing primary support at 250. Breakout would offer a target of 225*. Oscillation of 63-day Twiggs Momentum below zero reflects a primary down-trend.

Dow Jones Shanghai Index

* Target calculation: 250 – ( 275 – 250 ) = 225

Rising 13-week Twiggs Money Flow above zero indicates strong buying pressure on the Hang Seng Index. Breakout above 22000 would signal an advance to 24000*. A test of the rising trendline is still a possibility, but a correction that respects support at 20000 would still reflect a healthy up-trend.

Hang Seng Index

* Target calculation: 22 + ( 22 – 20 ) = 24

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 13, 2012

China – Hong Kong divergence

Divergence between the Shanghai Composite Index and Hong Kong’s Hang Seng Index is apparent over the last 12 months, with Hong Kong rebounding while Shanghai weakens.

Shanghai Composite Index and Hong Kong's Hang Seng Index

With no major changes in the HKDCNY exchange rate, to me this reflects political and economic instability on the mainland.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 11, 2012

Nomura's fresh alert on a Chinese hard landing | Telegraph Blogs

Ambrose Evans Pritchard writes:

Nomura’s early warning signal for the Chinese financial system – the China Stress Index – is flashing amber again…….Its case against China: “overinvestment and excessive credit; a rudimentary monetary policy architecture; too many privileges for state-owned enterprises; unintended consequences of financial liberalisation; the Lewis turning point; and growing pains from worsening demographics and increasing strains on natural resources”……..

via Nomura's fresh alert on a Chinese hard landing – Telegraph Blogs.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.