SINGAPORE (Dec 3): Ten years ago, I visited the Qianhai special development zone in Shenzhen. Then it was tidal mudflats, heavy earth-moving machinery, ramps of dirt, massive earthworks and a dream. Over the past decade, construction progressed as many in Hong Kong sneered at its apparent lack of purpose, but that simply ignored evolution into a smart city focused on innovation.

I visited Qianhai again this week after speaking at the APEC SME Summit. It is a modern, thriving, well-developed, high-tech ecocity that challenges the best developments in the world. When we look to cities of the future, this is what they will look like.

I had an opportunity to have a closer look at the product development of the world’s hottest artificial intelligence (AI) company, SenseTime. It is a true unicorn company, having raised total financing of more than US$1.6 billion ($2.2 billion), and is valued at over US$4.5 billion. It is entrusted by the Ministry of Science and Technology of China with establishing the National Open Innovation Platform for Next-Generation Artificial Intelligence on Intelligent Vision. I was introduced to what it calls a surveillance city. This is its most infamous service and includes instant facial recognition and analysis, real-time crowd analysis and behavioural analysis. It moves CCTV into the 21st century.

The rollout of this advanced AI capability raises many questions, including visions of a dystopian future, but the development is unstoppable. This and other SenseTime products are at the very cutting edge of development. They show AI in operation and in application. It is not just a dream or aspiration. These are real-time applications.

Later, I talked with Yingtong Sun, chairman and CEO of Nationz Technologies. Access to the building used SenseTime technology. It was simple, fast and accurate facial recognition from a small screen mounted where you would normally place your security access card reader. Just walk up to and through the turnstiles. Your face is recognised within an instant. It does not matter if you are tired and hungover, if your makeup has been added a little too heavily, if your hair is windswept and splattered from a downpour, if you have a swollen cheek following a dental appointment or if you have swapped glasses for contacts; nothing impedes the speed of recognition, driven by AI, as you walk quickly through the turnstile.

Sun explains how the company’s business is about network identity authentication. It has already developed RCC standards that are now incorporated into Microsoft, Intel, Acer, Dell, Huawei and others. It was bundling massive amounts of ID information into a simple SIM card. Swipe your phone to use the mass rapid transit, access health records, open your hotel room door, or even your own door at home to let a tradesman enter while you are on the other side of the city at work, or even in another country.

This is innovative technology, and application of that technology is a generation to a generation and a half ahead of its competitors in the West.

It gives lie to the monotonous false claim by US President Donald Trump that China’s success rests on the theft of intellectual property. These are home-grown developments that lead the world. As China’s financial markets open more, there is room for an innovation exchange-traded fund that will give investors easy access to the world leaders in AI and smart city innovation.

Technical outlook for the Shanghai market

https://s3-ap-southeast-1.amazonaws.com/siteimages-editor/Nov+2018/30+Nov+2018/30%20Nov_China.jpg

The Shanghai Index consolidated around 2,560. The initial retreat was rapid, but the momentum did not continue. The loss of momentum and development of a consolidation near 2,560 increases the probability of a new rally that will test the lower edge of the long-term Guppy Multiple Moving Average.

The GMMA 1-2-3 style breakout failed and has now developed into a potential 1-2-3-4 breakout.

The first part of the pattern is a rally-and-retreat that tests the strength of resistance offered by the group of long-term averages. This is as shown in point 1 on the chart.

The second rally is stronger, with a breakout above the upper edge of the long-term GMMA before the rally collapses. This is point 2 on the chart.

The third part of the pattern is a new rally breakout that clearly and strongly moves above the upper edge of the long-term GMMA. This did not develop, so this is the failed breakout at point 3 on the chart.

The fourth part of the extended breakout pattern is a new move above the upper edge of the long-term GMMA, and traders are waiting for a new rally to develop. The current consolidation forms a base for this potential new rally breakout.

The inevitable rally retreat that follows this fourth breakout uses the long-term GMMA as a support level, and then base, for a new rally rebound. This sets the conditions for a new uptrend.

Investors continue to wait for the fourth part of this test-and-retest pattern to develop.

The long-term GMMA is showing few indications of compression. This shows investors are growing slightly more confident because they are not aggressively selling into the rally. However, the broad situation shows this will still be a strong resistance level to overcome before the next rally to be able to develop into a fourth part of the GMMA pattern. Compression in the long-term GMMA indicates that investors have stopped selling.

A fall below 2,560 has the first downside support target near 2,450. Long-term historical support is near 2,400.

The current potential 1-2-3- 4 pattern in the Shanghai Index is not perfect. Usually, the series of retreat lows in the 1-2-3-4 pattern becomes less extreme with each new pattern segment. The most recent low between points 2 and 3 has been an extreme low. This variation in the patterns suggests we need to apply the analysis with caution. This suggests a weak breakout and uptrend.

Daryl Guppy is an international financial technical analysis expert and special consultant to AxiCorp. He has provided weekly Shanghai Index analysis for mainland Chinese media for more than a decade. Guppy appears regularly on CNBC Asia and is known as ‘The Chart Man’. He is a national board member of the Australia China Business Council.

China's advanced AI technology completely homegrown

US stock faithful ride US$7 trillion rally as market timing backfires

China's advanced AI technology completely homegrown

Related News

Highlights

US stock faithful ride US$7 trillion rally as market timing backfires

Related News

The productivity remedy

Winter has come

Why Is China cracking down on ride-hailing giant Didi?