After close to 17 months uptrend, DJI finally breakdown of its long-term uptrend channel and below its 50 days Moving average.
Last traded at 34,577.57
Next targets 33525 and 31100 represent a good 3 and 10 percent downside potential represented by the 2 targets in the short term.
With such unprecedented divergence some analyst are saying the Chinese internet sector is undervalue but is it time for investors to start ploughing into the market? President Xi Jinping’s
new slogan of “Common Prosperity For All” is throwing into question what new regulation will China add to achieve equal wealth distribution and Xi’s calls for higher taxation
has raised concerned making money could be politically sensitive. Internet companies, which have been designated as so-called “key software enterprises” (a category including Alibaba
and Tencent), have enjoyed beneficial corporate tax rates of 10% since 2008. Other companies pay a rate of 25%. There is a strong possibility that China Internet companies honeymoon period of 10% taxation may sooner than later be over. As long as investors fear that the China’s regulators are not finish with new requlations the China internet will need to wait a little longer before bottoming out. September being a traditionally weak month for emerging markets does not support a reversal of fortune in this sector. I believe the seasonal factor points to a Oct – Nov rebound.
Fund
managers are likely to avoid this stock in view of HKEx (0388.HK) announcement
yesterday that MSCI China A 50 Connect Index futures to commence trading in the
month of October 2021, which is a competing product to FTSE China A50 contract
traded on SGX.
SGX
weakness is likely to persist in the short term.
SGX last
traded S$10.22.
First
Target: S$9.81
Second
Target: S$9.34
No Sign of Strength - Could test 25,000 and 24,000 in the next month.
1. The stock has broken key support level with high volume
at S$2.21.
2. Contra Phenomenon
Traders chased the stock on 05 August 2021 betting that it would continue to break new ATH were caught as the stock retreated below its support at 2.21.
The huge volume traded on 05 August has created a supply situation that could dampen the price in the next two to three days due to the contra phenomenon.
First target: 2.09
Second target: 2.00
Third target: 1.93
Stop loss: 2.30
Could be heading towards the following targets:
First target: 0.60
Second target: 0.55
Third Target: 0.48
Could be heading towards the following targets:
First target: 0.86
Second target: 0.80
Third Target: 0.73
