It is a pleasure to be working in China again and it brings with it some memories about what we take for granted. I was reminded again of the difficulties faced by people who are in China to do business all by themselves for the very first time.
I bumped into an American colleague who was there on his second business trip. Travelling alone, he felt cooped up in his hotel. He was trapped indoors by his inability to speak or read Chinese.
Travelling alone in China is very different from travelling with a tour group. You get more out of the solo experience if you are prepared to be a little adventurous. The hotel does not have to be a virtual prison.
Ask the hotel front desk for directions to the nearest shopping centre. The shopping centres usually include food outlets ranging from delis to restaurants and cafes. These shopping centres are modern but with Chinese characteristics. The doorman who calls a taxi will happily give the taxi driver your instructions.
Take a photo of the hotel name card with the address printed in Chinese to show the taxi driver when you want to get back to the hotel. You can converse with him using sign language, smiles and shakes of the head if necessary.
The objective is to get you to the shopping mall or area. Use this as an anchor point to explore inside the centre or to walk the surrounding blocks. The variety of life, commerce and activity will provide a unique insight into everyday life in China.
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Supermarkets are a great place to shop for food. First, I find it interesting to see what is stocked on the shelves. The wide array of food, from preserved food to live food and other “exotic” items, provides a good guide to China’s living standards and conditions.
More importantly, the supermarkets are a focal point for the equivalent of delis, both inside the supermarket and outside. These are many small food stalls, each specialising in a particular type of food. Food from these delis is well prepared so you can buy and eat with confidence.
Often the food deli area is located in the basement of a department store. You walk through the displays of jade jewellery, gold, high-end perfumes and face creams, find the escalator and descend into the Chinese equivalent of a food court.
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It is an education just to walk through aisles and see the variety. I did this with my American colleague. I explained the different foods and how they are prepared. The staff behind the counters were amused. I spoke in English to my colleague and Chinese to the staff. We also ended up with a whole range of free samples to taste.
Real people do not live in hotels, board rooms, private dining rooms or tourist attractions. That is not to say these people are not real but they are not the ordinary people who inhabit the city. They are a specialised and self-selected group who choose to, or by necessity, interact with foreigners.
As a visitor, it is difficult to get a feel for the city outside of the business environment unless you are fortunate enough to develop strong friendships that take you out into the wider world. However, it is very easy to walk out of the hotel or conference venue and discover a very different world. It adds so much more to your China experience.
Technical outlook of the Shanghai market
The Shanghai Index has three major support features. They are all converging into a single area. This type of relationship offers a point of significant danger or opportunity.
A breakout above these support features can lead to a major and often rapid new uptrend. A break below these features often leads to a rapid downmove towards the next support area.
This confluence of features is a point where there is a higher probability of a significant change in the market direction.
The first of these support features is the historical support level near 3,080. This has previously acted as a resistance feature. It was also the upper edge of the long-term trading band.
The second of the support features is the value of the lower edge of the long-term group of moving averages in the Guppy Multiple Moving Average (GMMA) indicator.
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The GMMA has two groups of moving averages. The short-term group provides a guide to the way traders are thinking. Compression in the group shows agreement about price and value. Expansion shows disagreement about price and value.
The long-term group of averages provides a guide to the way that investors are thinking. A wide separation in the group suggests strong support for the trend as investors actively outbid each other to add to their positions. The lower edge of this group is not a formal support feature, but it suggests the lower limits of index activity that are consistent with a continuation of the trend. Index movements below this level often precede a change in trend.
The third support feature is the value of the uptrend line.
These three combine to suggest that the market can pull back to near 3,080 and remain in a long-term uptrend.
The value of all of these support features is near 3,080. This creates a powerful confluence of support features that can provide a solid base for a rally rebound and continuation of the uptrend.
Conversely, a break below these solid support features suggests a significant market collapse and a move towards the lower edge of the trading band near 2,920.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. 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
