The Hang Seng index declined by more than 1% as the number of global Coronavirus cases continued to soar. The index, which tracks the biggest companies in Hong Kong, has declined by more than 18% this year.
The decline today was broad-based, with 66% of the companies in the index declining. The biggest loser was Sands China, which dropped by more than 5%. Other big losers were companies like Sunny Optical, WH Group, and Galaxy Entertainment while the biggest gainers were companies like China Shenhua Energy and China Mengnua Dairy.
The index has had a difficult period in the past twelve months. Last year, the index declined as the number of protests in Hong Kong increased. These protests were caused by a bill that mandated the government to extradite the region’s citizen to China.
Meanwhile, the index rose today, even as the Hong Kong dollar continued to strengthen against the US dollar. According to data compiled by Bloomberg, the currency is having its best run rate since 2003 on tough liquidity issues in Hong Kong. The HKD has gained against the USD by more than 50 basis points this month.
Other Asian indices declined as well. In mainland China, the Shanghai declined by more than 1% while the Nikkei 225 dropped by more than 3.29%.
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The Hang Seng index declined to an intraday low of $22,953.1 and then pared back some of those gains. Looking at the hourly chart, we see that the index has been recovering after bottoming at $21,131 earlier this month. The index is along the 38.2% Fibonacci Retracement level drawn by connecting the highest and lowest levels this month. I expect the index to remain relatively bullish so long as it is able to break the important resistance of $23,500. If it does, the next important level to watch will be $24,000.