The top 50 most liquid stocks on the ShangHai while the ShangHai Composite contains 881 stocks trading on their floor.
The safest and secure bet are the more reputable and well known of their stocks. This is understandable as a foreign investor I would be a fish out of water trying to trade against their MMs not even knowing all their rules. At least the big caps are more widely recognized and the scamming would have to be kept to a bare minimum.
RSI is starting to look toppy on the Hang Seng Index. MACD is also getting tight and MOney Flow has been moving out of the ETF. It looks like profits are being had. With such a power move up I expect in time that there should be a retest of the rising MAs or $58 (14000) support maybe in time for the Dollar rally if the H&S pattern confirms itself.
FWIW - I do think China's growth will slow down a bit but not enough to weaken their economy or be considered a recession. Reason being that they are well positioned with their currency that they can ramp up their Yuan faster than we ramp up our dollar and can repeg if we decide to depreciate ours. Either way they are the preferred manufacturer to the US or to Europe and Japan. If we go into recession again we will go into it with an attempt to depreciate prices not spark it again less we want hyperinflation which I think would fail. China would probably keep revaluing their currency higher as ours went up to keep commodities affordable to them. This continued strong demand would still hurt them but at a much slower pace than it is hurting us. But Chinese products will still be cheap and we would keep paying for them. They are slowing the inflationary processes as we speak to squeeze as much growth out of the economic rock as possible.
At some point when we hit a recession and Americans cannot consume anymore the Yuan will have a better float and China will engage the rest of the work as consumers. It all hinges on how much price depreciation the Fed is willing to force on the market with rising rates. I don’t know what the ultimate goal is for them for the Overnight Rate but Money Supply Growth is the slowest its been for a while and the Real Rate of Inflation is over zero. There should technically be no more accommodation left in the market. This is technically healthy interest rates.
Take a look at this long term rate chart and how the Fed Overnight Borrowing Rate (pink line) has traded in a range for the last 30 years. This is probably as low as we can possibly go with rates without sparking a hyperinflation by becoming accommodative again. There should either be a continual rise in rates or a pause. They cannot lower them in any way without damaging the global economy. A pause is enough to be accommodative at this point. What can also be seen is that periods of recession or disinflation occur when the Overnight Fed rate reaches the top of this channel. Stronger recessions leading into potential deflation occur when we try to keep raising rates out of the trend. Interesting time I tell you.
Note this chart is old and does not paint the 3.5% Overnight rate we have now. As it stands a Fed Rate of 3.5 to 4.0 is at the top channel of the trendline.
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