The Correction of Hang Seng Index Persists

Hong Kong's Hang Seng Index retreated around 8% from July high at 26780 on weak Hong Kong's economic activity and the rising tension between U.S. and China.

Charts (5)

Hong Kong's Hang Seng Index retreated around 8% from July high at 26780 on weak Hong Kong's economic activity and the rising tension between U.S. and China.

The local economy of Hong Kong is still fragile as Hong Kong is still suffering from the third wave of coronavirus. Hong Kong's July Markit PMI dropped to 44.5, worse than the expectation of 50.4 from 49.6 in June.

The tension between the U.S. and China is escalating as the U.S. banned U.S. residents to do transactions with Tiktok and Wechat, and blocked China Telecom and China Mobile to offer service in America.

This morning, Chan's CPI rose 2.7% on year in July (vs +2.6% expected, +2.5% in June), while PPI dropped 2.4% (vs -2.5% expected, -3.0% in the previous month), according to the government.

The investors should focus on China's July industrial production (+6.2% on year) and retail sale (+1.5% on year) this week as the Chinese stocks weighted more than half in Hang Seng Index.

From a technical point of view, the index is capped by a declining trend line on a daily charting, indicating a bearish outlook. 

The 20-day moving average is also turning downward and the relative strength index broke below the rising trend line. Both indicators suggest that the downside momentum remains.

Bearish readers could set the resistance level at 25200, while support levels would be located at 23900 and 22500.


Source: GAIN Capital, TradingView

More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.