These largely unregulated media channels can inflict substantial reputational damage. No matter where your company operates, it is likely that you are fully aware of the risks associated with social media accounts, private or public, and the potentially embarrassing longevity of posts from decades previously, when your current position was just a dream of ambition.
China offers a unique counter to these risks and an opportunity to surf the waves of official and public approval. Participation or acknowledgement enhances brand, company and personal reputation.
It is a well-established process that the Chinese government will host strong public campaigns around a variety of issues. Western observers often dismiss these as propaganda exercises, but they reflect official thinking. They are a guide to subjects or topics that have become “sensitive” and to those areas which will receive Government endorsement.
These are much more significant than the “Rides are better” or “Bag down Benny” campaigns.
The China campaigns are not so much as reading tea leaves, or straws blowing in the wind, but giant three-character posters that only the foolish cannot read or ignore.
See also: Pop Mart, health-care stocks lead Hang Seng Index contenders
This year marks the 80th anniversary of the Victory of the Chinese People’s War of Resistance Against Japanese Aggression and the World Anti-Fascist War. The capitalisation appears in all official notifications from the Government and its embassies. The Chinese Government will hold a series of commemorative events.
In other words, this will be the national theme for July and August. Chinese media will feature reports, events, analysis and numerous speeches. Your competitors’ products will wrap themselves around these themes to capitalise on the patriotic wave promoted by the central government.
There are two things you need to be aware of. First, if your product is sourced from or identified with Japan or Germany, it would be prudent to play down these connections in any new advertising or comments on social media.
See also: China five years from now
Second, you may wish to build a short-term social media campaign supporting or recognising this anniversary. Considerable caution is required to avoid the perception of ‘grandstanding’ on the back of a national event, but when done correctly, it can deliver significant benefits.
Using Chinese social media is not just about Ps and Qs. It’s also about surfing alongside official national campaigns.
Technician outlook of the Shanghai Index
The minor pullback in the Shanghai Index was a buying opportunity in a well-established, steady uptrend. The index value continues to be clustered along the upper edges of the short-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator. This is a very consistent bullish relationship.
The short-term group of averages is an indication of the way traders are thinking about the market. The prolonged steady separation suggests they have a high level of confidence that the uptrend will continue. The clustering along the upper edge of the short-term GMMA shows that traders are not taking short-term profits.
The long-term GMMA, which indicates the way investors are thinking, has completely moved above the historical resistance level near 3,435. This means that the values of the long-term GMMA are now the most significant support feature for any major pullback in the trend.
The strength of the uptrend was significantly confirmed when the long-term GMMA moved completely above 3,435.
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Trend line B defines the longer-term uptrend.
There are three target areas for any sustained trend continuation. The first target is the value of the trend line A. The projected trend line acts as a resistance feature. The current value of the line is near 3,645. It is reasonable to anticipate a slowing of momentum as the index approaches this projected long-term trend line. A sustained break above this line is very bullish and puts the second upside targets within reach.
The second target is near the previous high of 3,675 reached in October 2024. This is a psychological resistance level and may exert little influence on the market because it falls just below a major historical resistance level.
The Shanghai Index behaviour is defined by well-established trading bands moving between support and resistance levels. The third target is the trading band price projection target, which is slightly higher than the October 2024 high and is placed at 3700. This is also the value of the three market peaks made in February, September and December 2021.
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
