Saturday 3 October 2009
China Property Stock Index Points to Slump: Technical Analysis
The Se Shang Property index’s 200-day moving average is at 4,214.70, 4.5 percent below the index’s close of 4,413.23 on Sept. 30. The index, which is down 28 percent from its July high, is an “exceptional” predictor of global markets, Michael Hartnett, New York-based chief global equity strategist at Bank of America, wrote in a report.
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China Property Stock Index Points to Slump: Technical Analysis
By Allen Wan
02 October 2009
(Bloomberg) -- China’s benchmark for property stocks is close to slipping below its 200-day moving average, signalling losses in global stocks and commodities and gains in the U.S. dollar, according to Bank of America Corp.
The Se Shang Property index’s 200-day moving average is at 4,214.70, 4.5 percent below the index’s close of 4,413.23 on Sept. 30. The index, which is down 28 percent from its July high, is an “exceptional” predictor of global markets, Michael Hartnett, New York-based chief global equity strategist at Bank of America, wrote in a report.
“Watch the Shanghai property index in coming weeks,” Hartnett said in the report entitled “world’s lead indicator on a precipice.” The index “sits precariously on its 200-day moving average. China property stocks are the nexus of China’s growth, policy and excess liquidity,” he wrote.
The Se Shang index, consisting of 24 companies, has jumped 95 percent this year, compared with a 53 percent advance for the Shanghai Composite Index, the nation’s benchmark, on speculation a 4 trillion yuan stimulus package will help the economy reach the government’s 8 percent annual growth target. The index warned of China’s economic slump in late 2007 and signaled the nation’s recovery in late 2008, Hartnett said.
The Se Shang Property Index also foreshadowed advances for emerging-market stocks in September 2007 and the Dollar Index in October 2008.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
JPMorgan Chase & Co. said this week China may raise interest rates twice next year as economic growth picks up and inflation accelerates.
The nation may start tightening monetary policy by increasing bank reserve requirements in the fourth quarter of this year, Credit Suisse Group AG said.
Markets in China are closed until Oct. 8 for National Day holidays.
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