(Feb 28): Living in Australia I enjoyed eating wild caught barramundi fish, prawns, mud crabs and eel along with wild caught kangaroo and wild (farmed) crocodile. These are premiere foods promoted in tourism campaigns and prepared by celebrity chefs.
In France it is also common to eat wild rabbit, wild pigeon, snails, frogs and (farmed) wild boar. France, like England and Germany, has a long tradition of eating game meat. Although its more common now to buy these wild foods conveniently shrink wrapped at the supermarket it still not that uncommon in Europe to buy a live chicken, pigeon, or snail in the market to take home and butcher. Even European tinned sardines proudly proclaim they are wild caught. Fresh food always has a premium and wild caught is considered superior to farmed.
China has the same traditions which brings us to the link between wet markets selling exotic animals and the development of new diseases — a link that seems to be particularly the responsibility of China.
I have worked in China for decades, yet there are times when — to my shame — my ignorance is exposed. I do not frequent wet markets but I, like many Westerners, assume the wild wet markets in Wuhan were filled with animals caught in the wild, trapped in cages, and bought to the market for sale. I imagine hunters scouring the hills for animals, setting traps, caging animals and carrying the poor creatures to market. It is an image the wildlife activists would have us believe and undoubtedly some of this does happen in remote and poverty-stricken regions.
But not so in Wuhan and elsewhere. These markets are supplied by an efficient industry which ‘farms’ these high demand animals. They may be considered wild animals, but they are not caught in the wild. They are carefully reared as livestock, packaged and then taken to market.
Nearly 20,000 wildlife farms raising species including peacocks, civet cats, porcupines, ostriches, wild geese and boar have been shut down across China in the wake of the Covid-19 outbreak.
Wildlife domestication in farming has been a key part of rural development, eco-tourism and poverty alleviation encouraged by China’s State Forestry and Grassland Administration. A 2017 report by the Chinese Academy of Engineering valued the wildlife-farming industry around US$70 billion ($97.85 million).
The mythology surrounding China suggest these large scale wet markets are supplied by a veritable army of peasant hunters capturing animals in the wild. These myths, based largely on ignorance and practices long outdated, are used both as a basis for racism and as a barrier to understanding.
Cross species infection is an inevitable function of human contact with animals. Pigs are the most prolific source of new strains of flu infections. Well-cared for horses can carry the deadly Hendra virus. Contented dairy cows, sheep or goats can carry anthrax spores classed as a biological weapon of war. Smallpox is closely related to cowpox carried by those who milked cows by hand. The list of animal cross contamination is long and not confined to so-called wild animals nor exclusively to China.
Rather than pinning blame for Covid-19 outbreak on a Western mythology of a Chinese wild wet market, we would be better off focusing on countering the inevitable disease breakouts and managing animal farming more effectively.
Technical outlook for the Shanghai market
The global contagion spread from the Dow has brought an end to the massive 15 day in the Shanghai Index. There are three parts of analysis for the Shanghai Index.
The first part is the behaviour of the rally and its retreat from the historical resistance level near 3040. This retreat was expected because this level has been such a strong resistance feature for the past year. The behaviour of the index following the retreat is important because it provides a guide to how the Shanghai Index may behave in coming weeks. Investors watch for a consolidation to develop below the resistance level.
In a bullish environment, this consolidation builds a base for a strong breakout above resistance at 3040. This now looks like a low probability outcome.
The second part is the role of support as the retreat develops. The strong historical support level is near 2980. The consolidation pattern may develop between support and 2980 and resistance at 3040. This type of sideways movement is consistent with the previous behaviour between these two levels. Consolidation contained between these two levels is a bullish feature because it gives a good base for a further breakout above 3040.
Failure of support near 2980 signals a more bearish environment. This failure may be prompted by the behaviour of the Dow. A fall below 2980 has a recent support level near 2900. This is the first consolidation area that appeared in the middle of the 15-day recovery rally. This is not a strong support level as it is not confirmed by activity in previous years.
The strong historical support level is near 2850. This suggests that any major retreat in the index could develop a consolidation pattern between 2850 and 2900. Consolidation at this level suggests a return to the longer-term sideways pattern in the Shanghai index when it moved between 2850 and 3040.
The third part is the development of a plot for a reliable uptrend line. A reliable trend line has three anchor points. Each anchor point is created by a well-defined retreat and rebound point. The low of these patterns is used as the anchor point for the trend line. The recent activity in the Shanghai Index is a rally because there is not any well-defined retreat and rebound point to use as a second anchor point for a trend line. The current retreat behaviour will eventually develop a rebound and the low point of this pattern will provide the second anchor point for the up-trend line. This will enable better assessment of the trend and its targets.
The large gap down in early February disrupts the calculation of averages so traders must wait for this impact to wash-out of any indicator calculation that relies on averages. This includes RSI, Stochastic, MACD and GMMA which are currently giving unreliable signals.
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.
