Last week, I landed at Shanghai Pudong International Airport. During peak hours, I had to travel across the width of the city to my hotel in Hongqiao, located near the China International Import Expo (CIIE).
It was a two-hour journey and it took me a little while to figure out what was different about it compared with my last visit to Shanghai before the Covid-19 pandemic.
The traffic was just as thick and the jams were much the same, but what was absent was the traffic noise. Even though the modern internal combustion engine is much more silent than it used to be, it is still noisier than an electric vehicle (EV) motor. In my rough and quite unscientific survey, around 70% of vehicles in Shanghai are now EVs. They are easily identifiable by their green number plates.
The impact on traffic noise is dramatic. The reduction in noise pollution, freed from the constant drone of engines, leads to a substantial improvement in the quality of life. With car windows wound down, you could hear the birds twittering in the trees, relieving one’s stress. It is far too easy to underestimate the social impact of this noise reduction, but it highlights the steady improvement of the environment in China.
Two other aspects of my trip to Shanghai highlight China’s engagement with the world and the world’s engagement with China.
I was in Shanghai to speak at the China Economic and Social Forum. Speakers were drawn from around the world, including Africa and the Global South. The focus was promoting equal, orderly multi-polarisation and inclusive economic globalisation. The forum highlights the difference between hegemonic approaches to trade relationships and a civilisational approach.
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Hegemony denies choice. The civilisational alternative puts choice at the core of international and trade relations. This was China’s engagement with the world.
Just a little further down the road is the CIIE trade expo, which is about the world coming to China and underlines China’s essential role in the global economy.
Unlike the Canton Fair, which focuses on Chinese exports, the Shanghai CIIE expo is a platform for Chinese buyers looking to import goods or services.
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The large number of participants and the attending crowd were proof of confidence in the growing strength of the Chinese economy and its essential role in developing all aspects of the global economy, from traditional commerce to new technologies underpinning the green economy.
For each of the countries exhibiting at CIIE, China is their largest trade partner. These exhibitors are eager to sell into China because they recognise that China is the most powerful consumer market in the world and one with continued growth potential. China is a consumer market that is too big to ignore and CIIE provides a gateway for foreign companies to develop new business contacts.
The China Economic and Social Forum and the CIIE showcase the internationalisation of the global economy. Like the low-pitched hum of traffic on Shanghai roads, these events are part of a quiet revolution in global engagement.
Technical outlook of the Shanghai market
The Shanghai Index is testing support near 3,440. The short-term upside objective is the peak of the September rally near 3,674. The emerging trend is defined by a trendline starting from the rebound around 3,155.
To be valid, this trendline needs a third anchor point. This suggests the index could fall to around 3,352 and still remain in the new uptrend. We have projected this as point D. Only future retreat, rebound and rally behaviour will establish if this third rebound point confirms the placement of the uptrend line.
The Guppy Multiple Moving Average (GMMA) indicator relationships suggest a high probability of a retreat, rebound and rally pattern. Firstly, the short-term group of moving averages remains well separated and suggests good trader support for the emerging uptrend.
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Second, the degree of separation in the long-term GMMA shows investors remain strong buyers. When the market retreats, there is no compression in the long-term GMMA. This tells us that investors are strong buyers during these retreats, arresting the market’s fall.
Third is the consistent level of separation between the short-term and long-term groups of moving averages. This characteristic is associated with strong and sustainable trends.
This combination of features suggests that any retreat followed by a rebound is a buying opportunity to enter a developing uptrend at favourable prices.
This pattern of development is also repeated in many individual stocks on the Shanghai and Shenzhen markets. This has delivered excellent high-return trading opportunities over the past few weeks.
Daryl Guppy is an international financial technical analysis expert. For two decades, he has provided weekly Shanghai Index analysis for mainland Chinese media. Guppy appears regularly on CNBC Asia and is known as “The Chart Man.” He is a former national board member of the Australia-China Business Council
