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Chinesestocks

Are investors bullish on Chinese stocks again?A raft of regulations targeting a number of sectors — from technology to real estate and education — have hammered Chinese stocks late last year and into 2022, and although many economists remain bullish on Chinese stocks’ potential, Beijing’s relationship with the Kremlin is now weighing on investor appetite for Chinese shares. On Friday, April 1, Shanghai’s SSE Composite Index tumbled 5.8% year on year, and is down 9.6% from the start of the year. The SZSE Component Index, the benchmark index of the tech-heavy Shenzhen Stock Exchange, is also down 13.2% year over year on Friday, and 17.3% lower year-to-date. The Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, likewise tanked 31.9% from last year as of Friday, and down 8% year-to-date. 2021 in retrospect In 2021, Chinese companies were hit with regulatory changes as Beijing sought to weed out anti-competitive behavior, online gaming addiction, excessive childcare and education costs, and eliminate other risks in the private sector. Beijing’s crackdown on the tech and financial technology sector led to the record fine of over 18 billion yuan (around $3 billion) on Alibaba (NYSE:BABA), the transition of Alibaba’s mobile payments arm Ant Group into a financial holding company and a raft of rules aimed at data security and anti-monopoly, among others. The government also targeted the education sector last year, launching sweeping rules that upended for-profit tutoring companies. New rules aimed at protecting minors also took a toll on the operations and revenue of big gaming companies like Tencent Holdings (HKG:0700) and NetEase (NASDAQ:NTES). Towards the end of last year, the vulnerability of China’s property sector came to light as China Evergrande's (HKG:3333) massive debt pileup of more than $300 billion highlighted the risks of the country’s highly-leveraged real estate sector that many fear would lead to a wider contagion affecting the country's financial industry and the global markets. These factors led to a sell-off of Chinese stocks at home and in the US, with the Nasdaq Golden Dragon China Index (INDEXNASDAQ: HXC), which tracks 98 of China's biggest US-listed firms, posting its sharpest drop since the financial crisis of 2008 in March after reaching an all-time high in February 2021. As of writing, the HXC is trading lower than its 2008 peak after retracing approximately 70% of the gains it made since its 2008 bottom. Booting Chinese stocks from US exchanges Geopolitical tensions and data security concerns prompted the US Securities and Exchange Commission to tighten its auditing rules on Chinese companies listed on US bourses. This threatens the US listing status of companies like KFC operator Yum China Holdings (NYSE:YUMC), Twitter-like Weibo (NASDAQ:WB), Baidu (NASDAQ:BIDU), and iQIYI (NASDAQ:IQ). Even before these firms were added to the SEC’s “provisional list” of companies that are found to be violating the US Holding Foreign Companies Accountable Act, the US has already booted several Chinese companies — including China’s big three telecommunications companies — over the past year, citing data security concerns and other alleged violations. Bullish on Chinese stocks Despite uncertainties over the outlook for China’s regulatory environment in the coming years, some global banks and economists including Bernstein, Credit Suisse and Goldman Sachs remain bullish on Chinese stocks. Credit Suisse upgraded its outlook on China, noting that values may be depressed, while Goldman Sachs underscored the investability of Chinese assets due to the liberalization and reform measures in the Chinese capital markets, which according to the bank backs its view that China equity is an asset class “that is too big, too growthy, and too vibrant to ignore.” Geopolitical woes, COVID-19 risks remain However, some economists are polarized on their outlook on Chinese stocks due to lingering geopolitical tensions and the resurgence of COVID-19 cases that recently prompted lockdowns in two of the country's most populous cities. Reports highlighting Beijing’s relationship with Russia might be reducing investor appetite for Chinese stocks. Beijing has refused to back a global condemnation of the Kremlin’s military actions against Ukraine, refusing to describe the attacks as an invasion. US-listed Chinese companies have lost over $1.1 trillion in market value in recent weeks due to these concerns and Asian Corporate Governance Association’s Jamie Allen told CNBC over a week ago that the delisting of US-listed Chinese firms could come in the next two to three years.
NASDAQ:HXC
by BlackBull_Markets
GXC... perhaps it is timeSo, the double tailed candles on the weekly chart only resulted on a week of downside, but the second week proved resilient. The daily chart shows the spike down blowout and the immediate recovery. This indicates very strong support at about 98-100. The new interim support at 102 is holding too. Now, I expected the lack of liquidity and sentiment to push lower, accentuated by the Chinese New Year absence of market participants. But this appears to be a subtle bullish hint that once the two week holiday is over, this dragon will fly... am expecting a test of the daily 55EMA, maybe even popping over the resistance (white line). Daily technicals are supportive.
AMEX:GXC
by Auguraltrader
When long strong resistance becomes support..BYD Company Limited ($BYDDF) THE COMPANY: BYD Company Limited, together with its subsidiaries, primarily engages in the research, development, manufacture, and sale of automobiles and related products worldwide. It operates through three segments: Rechargeable Battery and Photovoltaic Products; Mobile Handset Components and Assembly Service; and Automobiles and Related Products. The company offers internal combustion, hybrid, and battery-electric passenger vehicles; buses, coaches, and taxis; logistics, construction, and sanitation vehicles; and vehicles for warehousing, port, airport, and mining operations. It also manufactures and sells lithium-ion and nickel batteries, photovoltaic products, and iron batteries primarily for mobile phones, electric tools, and other portable electronic instruments; mobile handset components, such as housings and keypads; and automobiles, and auto-related molds and components, as well as provides assembly, and automobiles leasing and after sales services. In addition, it offers rail transit equipment; consumer electronics; and solar batteries and arrays, as well as involved in the urban rail transportation business. THE TRADE: Support and resistance levels are important points in time where the forces of supply and demand meet. These support and resistance levels are seen by technical analysts as crucial when determining market psychology and supply and demand. When these support or resistance levels are broken, the supply and demand forces that created these levels are assumed to have moved, in which case new levels of support and resistance will likely be established. A key concept of technical analysis is that when a resistance or support level is broken, its role is reversed. If the price falls below a support level, that level will become resistance. If the price rises above a resistance level, it will often become support. As the price moves past a level of support or resistance, it is thought that supply and demand has shifted, causing the breached level to reverse its role. (source: Investopedia) Sales of new energy vehicles surged 148% in September, data from the China Association of Automobile Manufacturers showed, spurred by Beijing’s promotion of greener vehicles to cut pollution. I'm long with a stop below the line. Long term investment. Trade safe!
OTC:BYDDFLong
by Elpidaldo
DIDI: THE UBER OF CHINA ON SALE?DIDI , considered as the UBER of China , has lost 60% since its IPO day. Chinese stocks have been beaten down badly. Is this the opportunity of a lifetime to buy them cheap? I don't know. Tell me what you think. Looking at the chart, I see a triple bottom and a potential bounce play for all Chinese stock. I believe that Uber is a Didi shareholder. For these reasons I'm investing in the company for the long term . Great buy here if you can handle the regulation risk.
DLong
by Elpidaldo
2
We will wait before taking action on Chinese Stocks. Today we will take a look at BABA. When do we think maybe a good moment to start adding Chinese stocks into our portfolio? Of course, we will look at the answer from a technical perspective, and this is the conclusion we make: a) We must see contact with the support level first (Is there buying pressure?) b) If we see bullish pressure, that is the first sign those big investors may be adding again. c) Ok, that's the first filter; the second filter is the breakout of the descending trendline. That would mean a change in behavior or sentiment. Now the price can stabilize and avoid the previous decreasing angle in price. d) Cool, can I buy it now? You can buy whenever you want; however, we will not do that; we want to see our 3rd filter. Corrective Pattern after the contact on the support level + breakout of the descending trendline. It's pretty standard after we observer a breakout of a key level (in this case, the descending trendline), a lot of FOMO comes to the market. "Chinese Stocks are booming! I will not miss this..." And most of the time, those traders or investors get trapped on a correction. e) So if all the previous filters happen, we will develop long setups on BABA. f) Patience is key when looking for quality setups; you can't ask the market for opportunities; you need to wait until the market provides one. Thanks for reading!
NYSE:BABA
by ThinkingAntsOk
55
The Evergrande Crisis ExplainedIn this post, I'll be providing an easy yet comprehensive explanation on the Evergrande crisis, and why it's important for us to understand the situation. Disclaimer: This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk. What is Evergrande? - Evergrande is China’s second largest property developer, founded in 1996. - To understand the size of this company, here are some numbers: - Evergrande is running more than 1300 projects in over 280 cities. - They’ve had success with real estate, so they also expanded horizontally, acquiring an electric vehicle company as well as Guangzhou F.C. - They own a lot of other smaller companies, but their main focus and main business is in the field of real estate. The Problem with Evergrande - The main problem with Evergrande is its liabilities. - The only thing you need to understand is that the company is in a lot of debt - specifically, $310 Billion. - The company is also going through hard times with insolvency issues, and underperformance in terms of revenue. - When the Chinese government put a list of companies that could pose a threat to the market and lead to its collapse, Evergrande was also on the list - It was also recently revealed they begged the government for help in their backdoor listing plan as well. Evergrande's Stock and Bond Prices - Overall, Evergrande's stock fell close to 90% from its all time high levels, and over 80% since the beginning of this year - The company’s dollar bond’s price has also dropped over 70%. - What’s also concerning is how the bonds of Evergrande’s real estate counterparts are also dropping sharply, and signaling a potential crash. Evergrande's Debt - Out of Evergrande’s $310B debt, about $85B comes from bonds and loans from banks. - These are the liabilities for which Evergrande actually pays interest on. - $67B comes from shadow banking systems; money from shady sources. - The rest of the $158B is actually the most important part. This is the amount of accounts payable. - When Evergrande is does business and they’re developing real estate, they need to buy the materials and resources needed. - But when they bought whatever they needed from their suppliers, they didn’t pay in cash. - It all went down as accounts payable, which basically means that they owe the suppliers money. The Anatomy of a Market Crash - Financial institutions and suppliers rely heavily on Evergrande, and a lot of companies could go bankrupt if they’re not paid. - This is essentially a domino effect of the entire Chinese market, with Evergrande at the center of it. - Not only that, we also need to think of Evergrande’s employees. - The company has over 123,000 employees alone, and that doesn’t include the number of construction workers who are hired for each of their projects. China's Real Estate Market Situation - China's real estate market is the biggest in the world - The market also accounts for 10% of China's entire economy. - Taking this into consideration, a complete collapse would cause devastating repercussions to not only the Chinese economy, but also the stability of the CCP, and the global economy as well. Why the Chinese Government is Capable of Bailing Evergrande Out - If we take a look at the numbers, it could also be said that they might get a government bailout. - While their liability amounts to $310B, the interest they actually need to pay imminently, amounts to $669m - This is also still a lot of money, but much more manageable than $310B. - So while Evergrande is having a hard time with insolvency, if the government were to help out just a little bit, they might just be able to get back on their feet. - And with investors gathering up in front of the Evergrande building and the probability of a political risk increasing, $669m might be a small sacrifice for the stability of the regime. China's Indirect Intervention - The Global Times, a media that directly reflects the stance, position, and opinion of the Chinese government, said that Evergrande was "not too big to fail". - But, China’s central bank injected $14B in cash in Sep. 17, and another $15B today through Open Market Operations (OMO). - And since the liquidity they provided was the most they’ve done in the past 8 months, it’s safe to say that they had Evergrande in mind Expert Opinion on the Matter - Michael Burry, founder of Scion Capital LLC, shared a tweet by @INArteCarloDoss, who states some important points. - The 3 redlines, which are the debt related restrictions, began last year. - China has been lifting the real estate market by leveraging a lot of debt, and the government wants to deleverage. - It’s almost certain that Evergrande’s bankruptcy is a matter of time, but the question is how severely other companies and financial institutions will be affected. - Of course the Chinese government will provide liquidity in the market, but won’t directly intervene and solve the problem for Evergrande. - Overall, it could be said that Michael Burry agrees with this thread that says Evergrande’s bankruptcy is inevitable, and that the Chinese government will indirectly intervene, if it does decide to intervene at all. - So a crisis in some form will certainly take place, it’s a matter of the degree to which it takes place. - On the other hand, we have @BaldingsWorld - Christopher Balding is a professor at Peking University - His logic is that we won’t see a financial crisis because we’re applying the logic of the free market to a country’s market that is actually completely under control of its government. - So this professor believes that a bailout for Evergrande is inevitable. How to Prepare for a Potential Crash - Since nothing is set in stone yet, the best we can do as investors is to keep my eyes open and look at how the Chinese government might directly or indirectly solve the issue. - Depending on how the situation deteriorates, increasing one's cash holdings might be prudent in case the US stock market also is affected. - This is especially important as the S&P500 index is currently testing the 60 Simple Moving Average (SMA) on the daily. (chart below) Conclusion Evergrande's debt situation might have greater implications than we can anticipate. Regardless of whether the Chinese government intervenes or not, and whether it does in an indirect or direct manner, there will be repercussions to the Chinese economy. As such, it's important to keep an eye on how the situation may unfold and affect the US stock market as well. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
HKEX:3333
by Michael_Wang_Official
121