hong kong city at night
Hang Seng (INDEXHANGSENG: HSI) Index finally is finally showing the effects of the worrying economic data in China. The index is down 2% for the day, and further bearish movement is expected. As of now, the index stands at 17,950 points.
The HSI is normally used as an overall measure of the Hong Kong Stock Exchange. The Chinese economy is having a hard time recovering since the end of lockdown restrictions. Investors are starting to worry as the second-largest economy has started to experience deflation.
Earlier this week, China reported a disappointing economic report that worried the whole world. A real estate crisis looms over the country as different real estate giants are reporting a massive decline in their stock prices. China also reported a 2.5% decline in new property prices for July 2023.
The Bank of China has tried to fight the negative sentiment by decreasing the interest rate. They hope this will increase consumption in their economy and attract foreign investment. But it seems like the damage has already been done as Hang Seng Index has plunged to fresh yearly lows.
The chart for INDEXHANGSENG: HSI shows the index has broken critical support of 18,275 points. For the Chinese stock market to show any recovery, the government should establish some measures like a stimulus package to reignite consumption in the economy. Until then, the outlook will likely remain bearish on the Chinese and Hong Kong stocks.
If the bearish sentiment continues to linger in the market, a further 5.5% decline is expected in the Hang Seng index. The bearish target will be the retest of the 16900 level. A silver lining for the bulls will be the reclaim of the 18,275 points level, after which a test of 18900 points could be expected.
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This post was last modified on Aug 18, 2023, 16:56 BST 16:56