High Noon in Shanghai

After making a high of 4335.96 on May 30, the Shanghai Stock Exchange Composite Index ('SSECI') has pulled back quite sharply. Today, it dropped 330 points to close at 3670.40. From the chart below, you can see that the SSECI will be testing its medium-term uptrend line at 3450 level very soon. This level should provide a short respite & the market may rebound from here. A break of this level could signal the beginning of a bearish phase for the Shanghai stock market.



Chart: SSECI's daily chart as at June 1 (courtesy of Yahoo Finance)

Unlike the February selloff, the current selloff in Shanghai is having a lesser impact on the markets around the region. Some see an orderly correction in Shanghai may benefit other markets, including Bursa Malaysia.