Hang Seng Index suffered third consecutive week of losses

[MongiIG]

The Hang Send Index fell 2.2% in the previous week to mark the third straight week of decline. Hong Kong’s stocks are now almost returning to where they started this year despite an impressive 10.8% jump in January.

Source: Bloomberg

 

Indices Hang Seng Index Technical analysis

Hebe Chen | Market Analyst, Australia | Publication date: Monday 20 February 2023 

The Hong Kong HS50 fell 2.2% in the previous week to mark the third straight week of decline. Hong Kong’s stocks are now almost returning to where they started this year despite an impressive 10.8% jump in January.

Hang Seng Weekly Review

Three slices of data from the US this month: glass-dropping employment numbers, a higher-than-expected CPI print, and then surprisingly robust retail sales numbers were seeing the global risk equity markets flipped over the rosy page in January, as raising concerns that the Fed will be forced to push terminal rates higher and extend its tightening journey.

During the first three weeks of February, the Hang Seng Index has dropped more than 5%, erasing most of the gains in January, with eyes now looking back to the level of 20100, where the new year started. In terms of sectors, the Hang Seng Technology Index is one of the worst performers, has dropped over 6.2% this month.

Hang Seng Week Ahead

For the week ahead, Alibaba and Baidu will step on the central stage to report their quarterly earnings after an eye-watering rebound recently.

Baidu, who attracted mounting spotlights this month after claiming to roll out its ChatGPT-like service in March, will unveil its Q4 earnings on Wednesday. Alibaba, with its share prices doubled in three months (from November to January), is expected to reveal a 20% quarterly EPS improvement on Thursday.

Hang Seng Technical Analysis

It’s clear that the optimism over China’s re-opening is now fading. As such, the strong momentum for Hang Seng Index since November is hitting a speed bump.

The descending trajectory, as noted in the daily chart, is sending the price back its September high, at around 20484. A break below this level will bring the 100-day in view, cementing the prospect of a bear overturn. The possibility of this scenario is also supported by the double breakouts in the weekly chart that, neither the three-month trendline nor the key support level (March 2020) succeeds in preventing the slide. On the other hand, a move above 20830 (23.6% retracement of the rally) could signal another test on 21216, where 50-day MA sits at the moment.

Hang Seng daily chart

Source: IG

Hang Seng weekly chart

Source: IG