Hang Seng index has immensely underperformed compared to its Western peers this year. At a time when the benchmark indices of the US equities are making record highs, the Hong Kong stock market has failed to show similar growth due to multiple factors. In fact, the latest technical analysis is pointing toward more downside for HSI in the coming days.
On Thursday, the benchmark index of Hong Kong stocks showed a minor uptick of mere 7 points. The price action came after a strong surge in the S&P 500 and Nasdaq 100 indices in their previous session.
There are multiple factors behind the underperformance of the HSI index compared to other major global indices. The most significant factor is the deteriorating situation of the Chinese real estate market. Unlike the US indices, the Hang Seng index majorly consists of financial firms with massive investments in the real estate market.
Therefore, the turmoil in the Chinese property sector is weighing on the companies listed on the Hong Kong Stock Exchange. As a result, the index is standing only 4% above its yearly lows.
The technical analysis reveals that the HSI forecast has flipped bearish after a recent rejection from the 16,800 points level. I mentioned this level many times in my previous forecasts as it was a strong support. However, the recent breakdown below this level has now turned it into a resistance level.
Consequently, it might not be a good idea to go long on HSI until it breaks above 16,800 points once again.
This post was last modified on Dec 21, 2023, 16:13 GMT 16:13