CHINA-Shanghai Comp : Gradual shift in the domestic market ?
By Rodolphe Steffan
The Chinese demographic situation has changed since 2010. The on-going decline in the number of young people of working age leads to better labor productivity. It is often followed by higher wages. In this sense, China may enjoy the growing purchasing power of its people. Domestic demand could gradually respond to the drop in exports. Foreign investment in the industry has declined by 6.4% since the beginning of the year but only 3.2% in services.
During Monday's session, investors sold the Chinese market due to the absence of new easing measures. The Chinese government does not want to make further interventions in order to avoid property speculation and to prevent an increase in regions' debt. However, the government has sufficient funds to increase social spending and therefore accelerate household consumption.
Technically, the trend remains bearish below 2135 points in daily data. It also refers to the 20-day moving average. The market is currently testing the 2100 points support from early August. A break below this level should trigger a significant consolidation toward 1800 points. On the upside, a break above 2185, in weekly closing, opens the way for a rebound towards 2300 points.
![Gradual shift in the domestic market ?](/graf/as31760.gif)
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