- Summary:
- Hang Seng index rose for the third straight day as investors reacted to the recovery in stocks. AIA share price soared and so did other insurance firms
The Hang Seng index rose by more than 1.31%, continuing a rally that started on Monday. It is now the best-performing index in the region after KOSPI and ASX 200, which rose by more than 3% and 1.75% respectively. The index is now trading at $24,300, which is the highest it has been in almost two weeks.
Financials lead in Hong Kong
The financials is the best-performing sector in the Hang Seng index today. AIA, the giant insurance company rose by more than 4.85% after the company announced a new CEO. Lee Yuan Siong, who used to be an executive director at Ping An, a rival insurance firm. AIA share price is trading at $70.
BOC Hong Kong, a banking group, was among the best-performing stocks today, gaining by more than 2 per cent. Other financial companies that are doing well today are China Life Insurance, Ping An Insurance, HSBC, and HKEX among others.
Return to growth
The Hang Seng index also rose as investors started to price-in a return to growth. This is after manufacturing and services PMI data showed that most countries are returning to growth. For example, data released earlier today showed that the services PMI rose to 55.0 in China from the previous 44.4. Another data showed that the manufacturing PMI in Hong Kong rose from 36.9 to 43.9 in May. These numbers show that the city is on a path to recovery.
Meanwhile, the index is also seeing significant inflows from mainland China as we reported last week. Data compiled by Bloomberg showed that people from Mainland China have bought shares worth billions of dollars.
All this is happening as investors ignore the rising tensions between the United States and China. Just last week, the US announced that it was ending the special relationship it has with the city.
Best and worst performers in the Hang Seng
The best-performing stock in the Hang Seng was AIA Group, whose shares rose by more than 5%. Other best performers were CNOOC, China Petrol & Chemicals, Geely Automobile, China Unicorn, and CK Hutchison.
There were just 10 laggards in the Hang Seng index. The worst-performers were CSPC Pharma, Power Assets, HK & China Gas, and CLP Holdings.
Download our Q2 Market Global Market Outlook
Hang Seng technical outlook
On the daily chart, the Hang Seng index moved above the 38.2% Fibonacci retracement level today. It also moved above the 50-day EMA, which is a remarkable feat. Therefore, it seems that the momentum has returned and that bulls are in control. This means that the pair will likely continue soaring as bulls attempt to test the 50% retracement at $25,168, which is slightly above the 100-day EMA.
On the flip side, a move below $23,500 will invalidate this prediction. This price is an important psychological level and support.