If a week is a long time in politics, then five years is an eternity. Five years ago, President Xi launched the “Made in China” as a foundation of China’s 14th five-year plan.
The idea of a competitive China, rather than a poor-house factory, terrified the US, which saw these objectives as an attack on American supremacy. Outside of China, the five-year plan spawned the Chips Act, sanctions, outright bans on competitors like Huawei and a prolonged campaign of anti-China rhetoric.
China persisted. The wholly foreseeable consequence of this mafia-style capitalism was twofold. First, it drove US-based Chinese researchers and developers back to China where they applied their skills. Second, it forced China to develop a resilience and an expansion of research efforts that might not have occurred in a more open trading environment.
The Huawei kirin chip is but one example of this resilience. DeepSeek is another example that has astounded, and frightened, the US as the Chinese AI company pulled the rug from under NVIDIA’s expensive near-monopoly. Lurking on the horizon and not yet fully appreciated by the West are breakthroughs in quantum computing and renewable energy.
The thorium salt nuclear reactor in Gansu changes the discussion about the role of nuclear power in renewables because it is invulnerable to meltdowns and does not produce nuclear waste.
These achievements defy Western expectations, but for the more informed, they provide investment opportunities. The difficulty is how to participate in these five-year plan achievements as they come to fruition. Direct investing in mainland China stock exchanges is possible using the Hong Kong-based Cross Connect service, but it is not for the faint-hearted.
See also: Getting China back on track
Arms-length investing in China stocks that are co-listed on the Hong Kong Exchange offers an easier path. A number of brokers offer direct access to these Hong Kong listings.
An alternative to this direct investment path is offered by derivatives with Singapore-listed warrants issued over more than a dozen co-listed China stocks in Hong Kong. The selection of choice is more limited than the broader red-chip board, but the selection also carries less risk in the sense that these are major China companies.
Investors seeking to use warrants can participate in the fruits of the five-year plan, enjoy the ability to leverage the results, and have the choice of traditional tech companies, emerging green-energy companies and those that are based in the traditional areas of the economy.
See also: Is China winning?
Exposure to traditional tech and e-commerce companies includes Alibaba, Baidu, JD.com, Meituan and Tencent.
The green-energy companies include BYD, Geely and Xiaomi. More traditional old-economy opportunities are found in companies like Lenovo and Ping An.
China is laying out its achievements developed under the five-year plan. Traders and investors can reap the benefits with direct or arms-length exposure.
With one year left to run, these companies, and the emerging groups like DeepSeek, provide the foundation for the next five-year plan.
Technical outlook for the Shanghai market
The Shanghai Index uptrend has encountered minor resistance near 3,388. This has no historical precedent, so it is not considered as a major or significant resistance factor.
The position of the uptrend line has been adjusted to reflect the successful rebounds following the recent retreats. It may need to be further adjusted as the market reacts to Trump’s tariff changes.
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The significant feature is that the index has remained above the lower edge of the long-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator. The long-term GMMA has also maintained a steady degree of separation. Ideally, wider separation would suggest that the trend support is stronger. The relatively narrow separation shows trend support has stalled.
The key factors traders are watching are twofold. The first is a sustained close below the value of the uptrend line and the value of the lower edge of the long-term GMMA.
The GMMA indicator relationships continue to suggest the trend is sustainable as it has tolerated the pullback without threatening the underlying trend activity.
The second factor is the ability of the index to move above temporary resistance near 3,388 and head towards historical resistance near 3,435.
The support and resistance features on the chart, coupled with trend line analysis, provide the structure of the market and help the trader to set index objectives.
The first significant barrier to a rising trend is the value of the upper edge of the trading band near 3,435.
This remains a bullish breakout environment but traders will be alert for sustained moves below the trend line and the lower edge of the long-term GMMA. This would signal a move towards temporary support near 3,230.
Daryl Guppy is an international financial technical analysis expert. 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 former national board member of the Australia China Business Council
