The Hang Seng index ended the trading day on a lower note as concerns over Beijing’s COVID-19 situation continue to weigh on the index. Shares of Chinese tech companies such as Alibaba, Baidu Inc and Tencent Holdings fell on Monday between 0.7% and 3.4%. Electric carmakers such as Nio and Li Auto Inc also felt the heat. Nio closed 1.33% lower, Li Auto fell 3.76%, while Xpeng was the heaviest loser of the lot, shedding 7.61%.
The Hang Seng index witnessed risk-off sentiment in the trading session, which is why risk-associated tech and EV companies shed weight on the day. The fundamental trigger for the selloff is the COVID-19 situation in Beijing. According to reports monitored by Global Times, Chinese authorities are imposing new lockdowns in several districts such as Shunyi, Fengtai and Chaoyang. The new lockdowns slow down industrial activity and could be a factor in how investors respond to the earnings of companies such as Alibaba and Xpeng. Their earnings results are expected this week.
The Hang Seng index fell 1.19%, even as the bulls pared some of the losses sustained.
The intraday bounce on the 20322.56 support (6 May high) was not enough to relieve the pressure on that price mark. If the support collapses under bearish pressure, 19718.00 becomes the new downside target (27 April low). Additional targets to the south come up at 18698.53 (16 March low) and 18290.74 (15 March 2022 low).
On the flip side, an extension of the bounce targets the 8 March/5 May highs at 21287.15. If the bulls take out this resistance barrier, 21654.41 becomes available as a new target to the north, being the site of a previous high on 18 March. Additional northbound targets are at 22756.22 (20 December 2021/25 February 2022 lows) and 23257.04 (29 December 2021 high). The former becomes viable after the bulls take out 21654.41 to see clear skies before this target. Only when 23257.04 gives way will 24292.07 become available.
This post was last modified on May 23, 2022, 17:36 BST 17:36