Day 98 Ideas of the Chinese stock market

Ideas of the Chinese stock market

There are two shares I would like to evaluate today. I am going to proceed with both technical and political evidence and hopefully this article will assist you on investing relevant securities.

Let’s start with China Minmetals Rare Earth Co. Ltd.(sz.000831). Through reading the candle stick chart of the last four trading days. We can realize the share price was expressing a bearish trend. However, on the prior trading day(27th), a reversal hammer shape appeared. The upper wick of the body indicates at some point of the day. The buyer force pushed the price up but the consistent selling pattern dragged the price down at the end of the day. This possible bullish reversal pattern was emphasized by today’s hammer pattern, which the price was retained at a high level by the bulls. The committee of the share is 29.24% today, and the turnover is about 4.99%. These ratios justified the positive trend of the price, since the rapidly turnover plus the prevailing purchasing power in the market. At the policy level, the recent announcement of the Silk Road Economic Belt development immensely stimulated the infrastructure market. In addition, the consolidation between the CSR CO. Ltd and CNR Co. Ltd. was considered as the signal of amalgamation on government-owned corporations. China Minmetals Rare Earth Co. Ltd.(sz.000831) as the leader government owned enterprise was expected to reform along with other corporations in the industry, in order to eliminate over capacity problem and increase competitiveness in the world. As a consequence, the share can be held to obtain the future substantial capital gain.

Another share would be the Sichuan Tianqi Lithium Industries, Inc. (002466.SZ). Which is the major market participant in the lithium production business. We shall still focus on the technical analysis first. According to the candle chart, there was a tremendous bullish engulfing pattern appeared on 24th. Where followed by a robust upward trend. Although the price was dragged down a bit in the last two trading days (which can be predicted via the hanging man pattern on 27th), the increased proportion of the candle stick body indicated the buying and selling power tended to be balanced in today’s market. This is backed by the committee today at -28.17%, which defined the bears had a trivial advantage in the market. The turnover was at 3.86% today, corresponding to a large amount of main capital withdrawal, which also caused the temporary bearish pattern. On perspective of policy level, the National People’s Congress proclaimed the future government support towards new energy area. The Lithium is the core material for the lithium battery that is anticipated as the new power source for vehicles. Therefore, the future expansion of the market will definitely benefit the market leader Sichuan Tianqi Lithium Industries, Inc. (002466.SZ).

Even though this is not a sophisticated analysis, I hope it explained the idea of the two common approach that we used to assess financial asset.