Shanghai Composite 2013-16

The Shanghai composite peaked in October 2007 prior to the financial crisis in 2008 and now stands at only half the levels it reached then.

2013

The index has, along with all the major markets, risen between November and February. However it has dipped in the last week

And the month as a whole has not seen much of a rise

March promises to be more exciting. There will definitely be volatility, but with some of the negative influences taking  back seat and being replaced with positive sentiment there should be a net upward movement again.

April is less dramatic with a consolidation of any gains. However there is the beginning of a new mood in the market which could be the start of a long term trend. This will take some time to develop though so at this stage investors should be looking for indicators of what that long term influence will be

The next couple of months promise to be more mixed, with no discernible trend. There should not be too much pullback with the market continuing consolidation.

July and August see a return to the themes of April

 But September might see more volatility as there are conflicting signals.  There are wider events at play at this time and the market may be reacting to these rather than long term local trends.  By November the amount of trade looks likely to increase substantially and this is likely to heighten the volatility too.

The year ends with no change to the underlying situation but with more interest in the market from the international community.

2015

There is likely to be a rise in the index as 2015 starts. This is partly due to momentum which has been building all year and partly due to the new interest from the wider investment community. Not all the indicators are positive, however, and there is continued volatility,  but the balance seems to be in favour of credibility in the market rather than fear of its risks.

More volatility seems to be the picture in March to May. Again there are global influences at play that are affecting the market at this time. However despite all the uncertainties, there still seems to be a belief in the opportunities here.

The period around June and July is quieter with a reduction in the fluctuations and no discernible trend

But activity starts to pick up again in August through October  with a notable turning point in the market.

The next noteworthy time is December. Again we see indications of external influences on the market, but this time they are likely to be less enthusiastic. It might not be a loss of faith in the index, but rather a concern with other matters than means that there is a reduction in interest in it.

 2015

The first quarter of 2015 probably sees nothing new happening. The market is still absorbing the events and changes of the previous 2 years . There is a chance that there might be substantial speculation at this time, but the signs are not 100% certain and it could also be that there is little direction in prices. There is more likely to be a boost in the period around March and April than in the first two months.

Although there are background favourable indicators ,then come a few months when the market is restricted again by international matters.  It isn’t really till September that trade will again receive another boost. By the end of that month there should be much more interest in the market again and more volatility. 

The last few months of the year see a return to the conditions of January to April. However, although the indicators remain mixed, the net effect is more likely to be negative at this time, with doubts and restrictions dominating. By now, those longer conditions will have established themselves and the new view of the index will be embedded. It will be performing a very different role to that in 2012 when this forecast began.

 2016

The beginning of 2016 is calmer again. There is positive sentiment but it is unlikely to be destabilising and the market will probably just hold its value through January and February

March, however sees a return to some volatility and perhaps even some speculative rises . However there are also forces at play to restrain such increases and so a clear trend is unlikely to develop before May.

In fact it is likely that things will have quietened down a little by June. While all the background influences still remain intact, they are operating at a much lower degree and so leading to less excitement regarding the index; merely just some pleasant positive feelings.

While there might be a little more excitement in August and Sept, on balance the calm continues.

And even October which is a more upbeat month still has a feeling of calm about it.

Indeed it is not till around December that there is a clear change of mood. At this time there is potential for huge volatility, although it may be tempered a little by conditions elsewhere.