In May this year we called on our readers to go short in Chinese shares; to be specific SGX China A50 future, which is a future contract on largest 50 A share companies by full market capitalization of the securities listed in Shanghai and Shenzhen stock exchanges. A CFD (Contract for difference) instrument is also available on SGX A50 future; that is CHN50 offered by FXCM. Here is the link, https://www.econotimes.com/FxWirePro-Sell-SGX-FTSE-China-A50-Future-targeting-15-percent-decline-1298413
We recommended selling the index at the then current rate of 12550, targeting a 15 percent decline or a decline towards 10650 area.
In a follow-up review, we urged readers to enter additional short positions at the then current rate of 11140 with an initial target of 10400 area and a final target of 9500 area, with the stop loss around 11700 area, https://www.econotimes.com/FxWirePro-Call-Review-Add-fresh-short-positions-in-SGX-FTSE-China-A50-index-targeting-9500-1424307
Since the call, the economic situation has further worsened,
- The ongoing trade battle between the United States and China has further escalated with the two countries imposing tariffs on $260 billion worth of bilateral goods. However, there have been talks recently that a deal could be reached when President Trump meets with President Xi of China in Argentina.
- Signs of fracture in China’s debt market and its economy is more prominent. Signs of a slowdown are becoming evident.
- China’s car market is showing major signs of fracture as sales growth declined for the first time in decades on a yearly basis. In October alone, sales were down 26 percent on a monthly basis.
- The global stock market has come under extreme stress since October, with U.S. benchmark S&P500 declining more than 8 percent last month.
In this review, we would like to extend the target from 9500 area to 9000 area. The index (CHN50) is currently trading at 11190 area.
