China Real Estate Developers Remain Under Pressure

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China's house prices index in 100 cities rose 0.53% on month in June, rising for the fourth month. Besides, China's second hand home sales rose 20% on year. Above economic data suggests that the real estate market in China is recovering after the outbreak of COVID-19. However, the stock in this industry does not perform as good as the economic data.

Downtrend 5

China's house prices index in 100 cities rose 0.53% on month in June, rising for the fourth month. Besides, China's second hand home sales rose 20% on year. Above economic data suggests that the real estate market in China is recovering after the outbreak of COVID-19. However, the stock in this industry does not perform as good as the economic data.


China Evergrande (3333.HK) Breaking below of rising trend line


Source: GAIN Capital, TradingView

Recently, China Evergrande announced that the contracted sales in the first six months of 2020 was up 23.8% on year to 348.84 billion yuan.

The stock price peformance of Evergrande is one of the strongest stocks in China real estate industry. The stock soard around 180% from March low to HK$28.00 in July. After that, the prices fell around 25% from July's high.

On a daily chart, the stock broke below the 20-day moving average after posting an inverted V-shape reversal pattern.

In addition, the prices broke below the rising trend line drawn from May.

To conclude, as long as the resistance level at HK#23.20 (38.2% fibonacci retracement) is not surpassed, the stock should consider a drop to the overlapping support levels at HK$19.20 and HK$16.75 respectively.



China Vanke (2202.HK): Under pressure


Source: GAIN Capital, TradingView


Recently, China Vanke reported that contracted sales from January to June dropped 4% on year to 320.48 billion yuan.

From a technical point of view, the stock sharply retreated from July's high at HK$29.80 on a daily chart.

Currently, the prices returned to the level below both 20-day and 50-day moving averages.

The relative strength index broke below the neutrality level at 50 and the rising trend line drawn from March.

Bearish readers could set the nearest resistance level at HK$26.55 (the previous high), while the support levels would be located at HK$23.85 (the low of May) and HK$21.70 (the low of March).


Country Garden (2007): Bearish trend remains


Source: GAIN Capital, TradingView

On a daily chart, the stock reversed course to the downside after a high close on July 6.

Since then it has accelerated to the downside.

Currenlty it has returned to levels below both 20-day and 50-day moving average.

The technical configuration is favoring a Bearish Bias.

Downside support would only appear at HK$9.45 (intraday low of June 30) and HK$9.08 (intraday low of May 25).

Bearish buyers should take the level of HK$10.48 as the Key Resistance (Stop-loss) level.

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