Technical Analyst - Global with an Asian focus, Aletheia Capital

Chris Roberts

Technical Analyst - Global with an Asian focus

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Technical Analysis

iShares MSCI China ETF / Technical Analysis

2017 has been very good for equity investors, most stockmarkets have been strong with minimal corrections this year. Recent accelerations in some markets (like Japan’s Nikkei 225) and leading stocks (like Alibaba and Tencent) suggest that the fear of missing out has intensified.In Asia, the regional benchmark, the MSCI Asia Free ex-Japan (MXASJ – 699), had at last week’s high of 707 gained 40% from its late December low, while the largest peak to trough correction this year has been just 3.8%. This is unusual, in the 22 years from 1995-2016 there were only two years when the MXASJ did not have a double digit decline, and even those years came really close to doing so: 2005 (-9.0%) and 2014 (-9.9%). Eight of the 22 years had two double digit declines.Buying when markets are excited is risky. We now have just 4 weeks of liquid markets before year-end, the temptation to lock in some profits will increasingly influence some traders thinking. In this report we focus on the MSCI China, the clear Asian winner this year, and list a number of factors that would suggest that a correction was underway.We also look at the relationship between newChina (MSCI China) and old China (the China H Share Index ). Finally we take a look at the China H Share Index technicals.

2017 has been very good for equity investors, most stockmarkets have been strong with minimal corrections this year. Recent accelerations in some markets (like Japan’s Nikkei 225) and leading stocks (like Alibaba and Tencent) suggest that the fear of missing out has intensified.In Asia, the regional benchmark, the MSCI Asia Free ex-Japan (MXASJ – 699), had at last week’s high of 707 gained 40% from its late December low, while the largest peak to trough correction this year has been just 3.8%. This is unusual, in the 22 years from 1995-2016 there were only two years when the MXASJ did not have a double digit decline, and even those years came really close to doing so: 2005 (-9.0%) and 2014 (-9.9%). Eight of the 22 years had two double digit declines.Buying when markets are excited is risky. We now have just 4 weeks of liquid markets before year-end, the temptation to lock in some profits will increasingly influence some traders thinking. In this report we focus on the MSCI China, the clear Asian winner this year, and list a number of factors that would suggest that a correction was underway.We also look at the relationship between newChina (MSCI China) and old China (the China H Share Index ). Finally we take a look at the China H Share Index technicals.

Hang Seng China Enterprises Index (HSCEI INDEX)

iShares MSCI China ETF

MSCI China: Thin Air?