The foundation cultures of Asia are heavily influenced by the Chinese — be it in habit, respect for learning and older people, cuisine derivatives and others. The degree of influence varies, but the shadow is always there.
In the 20th century, this orientation shifted as the American cultural behemoth dominated the globe with its entertainment, products and consumerism. Coffee replaced tea, and Coke became a universal symbol of this culture, along with blue jeans. With an estimated 1.5 billion middle class in Asia in 2020, growing to three billion in 2030, there is an assumption that the needs of this group will be met with more of the same solutions as in the past. However, there is growing evidence that the cultural dynamics of this middle-class demographic are changing.
Working with that change brings new business opportunities. Some observers suggest that with higher levels of disposable income and rising quality of life, Asian middle classes will become culturally distinct from the Westernised generation.
There is a degree of nostalgic patriotism reflected in a desire for films, music, and clothes that portray their lifestyles, values, heroes and worldviews distinct from the Asian tropes portrayed in Western films.
As the wealth of the middle class grows, they develop the industries, financing, and confidence to follow these desires. In Singapore, this led first to shows like The Little Nyonya, then Ah Girls Go Army and more recently, Last Madame.
In China, the movement is more advanced, ranging from international films that provide perspectives beyond Hong Kong action films. Movies like Red Cliff and The Eight Hundred are part of an ongoing cultural revival that challenges businesses to change how they market in the country.
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It is too easy to dismiss this as crafted Chinese propaganda. This reflects a cultural shift that restores non-American culture to a competitive footing. India, Nigeria, and China produce the most films annually, followed by the US.
A recent article in The Economist noted that Hollywood is losing its grip on the Chinese market: Western cinema’s viewership share has steadily declined while China’s domestic cinema is rising.
China’s hanfu movement involves dressing in Tang Dynasty fashions, but this extreme is moderated in modern Chinese fashion on the catwalks of Paris that reflects these cultural heritages.
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American popular culture is pervasive, but its dominance is being challenged. The success of Korean entertainment in the West is just one example. For the first time in over a century, Western soft power — which has shaped much of “global” culture — may be slowed down or even reversed.
Localising products and services adds a competitive advantage for those doing business in China. Jeans will not disappear, but they may have a more distinctive Chinese look. This is an aspect of marketing and branding that deserves greater consideration.
Technical outlook for the Shanghai market
The Shanghai Index continues to oscillate around the central area of the long-term trading band. There is growing evidence of a bullish bias in this oscillation. The most powerful of these is the way the lower edge of the long-term group of moving averages in the Guppy Multiple Moving Average (GMMA) indicators has provided consistent support for recent rebound rallies.
The GMMA helps to track the behaviour and thinking of the two main groups in the market — traders and investors. Of these, the investors provide the necessary support for a trend continuation. Strong support is shown by wide separation in the long-term GMMA.
The second evidence is the long-term GMMA’s relative position and the trading band’s centre area. The value of the lower edge of the long-term GMMA is above the historical support level, near 3,280. This shows investors are moving in as buyers when the market dips. Investors are supporting the bullish trend in the market.
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The Shanghai Index has been dominated by trading bands for extended periods. The lower edge of the current trading band is near 3,220. The upper edge of the band is nearly 3,350. The centre point is near 3,280. These are the base reference points for future index move calculations.
Currently, the index activity is located in the upper half of the trading band area. This is the third piece of evidence that suggests a bullish outcome. The dips below the centre line value of 3,280 have rapidly recovered and returned index activity to the upper levels between 3,280 and 3,350.
The trading band can be used to set future upside target levels. The next projection of the move above 3,350 gives a target near 3,415. This is a reliable target because it matches the chart’s peak highs in mid-2022 and earlier periods.
The same measured move calculation is applied. A breakout above 3,415 has a calculated target near 3,480. This target level has a history of acting as a support and resistance feature from 2020 to 2021, likely creating a pause area in the index breakout. A fall below 3,350 has support near 3,280.
The Shanghai Index has a history of volatility, so fast moves are always expected. Whilst the long-term GMMA remains well separated, these dips are buying opportunities.
Daryl Guppy is an international financial technical analysis expert and special consultant to AxiCorp. 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 national board member of the Australia China Business Council. The writer owns China stock and index ETFs
