China Stock Market Divergence Resolved

Last month I discussed how the Shanghai Composite remained in a pronounced bear market
even in view of rising China based indices which focused on the larger companies the
China authorities leave open to foreign investment. Using traditional western standards, the
case for anticipating a cyclical bull market fell into place in early 2012 as monetary policy
eased and economic momentum began to stabilize. Perhaps there was an awaiting of the
announcement of the new leadership and their respective portfolios before the boys hit
the green light. The Gov. appears to want to give the Shanghai index a better standing. The
exchange is pressuring listed companies to institute and pay out higher dividend rates and
authorities appear to strongly desire to limit real estate speculation all of which could provide
more stability for the highly volatile Shanghai which players have used to try and build "kittys"
to play the more highly esteemed real estate markets.

There has finally been a sharp positive turn for the index which started as 2012 drew to a close.
The impulse has been strong enough to reverse a downtrend in place for several years duration
and the market has crossed above its 200 day EMA to stand around 2275. Projections for
China's  growth vary greatly, but if you take formal assumption from the authorities of 7% real
GDP  growth, the SSEC should trade eventually up around 2700. Shanghai Composite