While stock markets in developed Asia like the Nikkei 225 (
) hit 19-month highs, the Shanghai Composite (
) continues to struggle.
[caption id="attachment_69432" align="alignright" width="300"
caption="Gloomy start to the week for the Shanghai Composite"]
In addition to Japanese strength, Hong Kong's Hang Seng exchange
) traded higher -- in particular companies with exposure to Western
economies - on the back of a better than expected U.S. jobs report
In spite of regional outperformance, the Shanghai Composite
dropped roughly a third of a percent on Monday. While other Asian
economies reacted positively to data from the United States,
Chinese data released over the weekend was less bullish.
Retail sales rose 12.3%
according to data issued by the government on March 9
; while otherwise impressive, these sales failed to meet analysts'
expectations. As well, industrial production increased 9.9%
over the first two months of the year, the lowest total growth
These numbers disappointed traders hoping for a rebound in the
Shanghai Composite after data
from previous months
had indicated a strengthening Chinese economy.
While industrial production for February may not have impressed
traders, it's hard to make too much of these numbers given that
they measured growth during the not-so-busy period during Chinese
New Year. A more accurate picture of the current state of the
Chinese economy will be available when March industrial production
numbers as well as other metrics are released later this month and
As for the Shanghai Composite, the exchange appears to be stuck
in a short-term downtrend ever since making six-month highs in
early February. Currently hugging the 50-day moving average, a
high-volume break below this important level could see the
downtrend in this principal Chinese exchange be extended further;
conversely, a new round of positive data could see the exchange
test the highs it made earlier last month.
Traders looking to play the Shanghai Composite over the
short-term should wait for additional clarity through data or
technical before going long or short China.