HKIND Frenzy Will the Hang Seng rise from the ashes?
The impact of several Chinese economic indicators has pushed the Hang Seng index higher, albeit with mixed results: while retail sales, industrial production and foreign investment data beat expectations causing the index to correct higher, the unemployment rate showed a slight increase of 0.1% from the previous one. The anticipation of this week's meetings of the US Federal Reserve and the Bank of Japan are crucial to define the trend in China and the region as a whole. However, corporate conflicts such as those related to TikTok and Fisker's bankruptcy on the NYSE have weighed down the index, leading it to a significant drop losing 3.84% from its price of 17194.50 to 16534.06 points. Despite this, the electric vehicles and batteries sector which weights very heavily on the Hong Kong index has shown some resilience, contributing to a slight rebound of the index by 0.4% in the current session.
In terms of technical analysis, the chart reveals a bearish construction trend since last year due to multiple economic scandals in China, highlighting the real estate and banking scandals. However, since January, the price has shown signs of recovery recovering quotes from December 2023. This could mark an index that is more undervalued than it really should be and a perceived depreciation in excess of the real value of the companies that make up the index. The RSI currently stands at 49.38%, indicating a possible reversal to the upside. The price bell signals a checkpoint at 19437.89 points, suggesting a possible return to that zone in the long term. A Chinese economy that has shown 5% growth versus the US economy that only grew by 2.4% in an environment of slowing consumption, for a country heavily dependent on exports, is growing at these rates due to its high domestic demand.
If we stick to the short term analysis, a wedge analysis suggests a top at 17187.53 points, with a short term target that could take the index to the price zone of the previous range around 18393.53 points. However, if this pattern is not confirmed and the index continues its downtrend after reaching 17187 points, the support level would be looking for its support zone at 14693 points.
Ion Jauregui - AT Analyst
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
In terms of technical analysis, the chart reveals a bearish construction trend since last year due to multiple economic scandals in China, highlighting the real estate and banking scandals. However, since January, the price has shown signs of recovery recovering quotes from December 2023. This could mark an index that is more undervalued than it really should be and a perceived depreciation in excess of the real value of the companies that make up the index. The RSI currently stands at 49.38%, indicating a possible reversal to the upside. The price bell signals a checkpoint at 19437.89 points, suggesting a possible return to that zone in the long term. A Chinese economy that has shown 5% growth versus the US economy that only grew by 2.4% in an environment of slowing consumption, for a country heavily dependent on exports, is growing at these rates due to its high domestic demand.
If we stick to the short term analysis, a wedge analysis suggests a top at 17187.53 points, with a short term target that could take the index to the price zone of the previous range around 18393.53 points. However, if this pattern is not confirmed and the index continues its downtrend after reaching 17187 points, the support level would be looking for its support zone at 14693 points.
Ion Jauregui - AT Analyst
**********************************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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